MEDMEN ENTERPRISES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE 13 AND 26 WEEKS ENDED

DECEMBER 28, 2019

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MEDMEN ENTERPRISES INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FOR THE 13 AND 26 WEEKS ENDED DECEMBER 28, 2019

This management’s discussion and analysis (“MD&A”) of the financial condition and results of operations of

MedMen Enterprises Inc. (“MedMen Enterprises”, “MedMen” or the “Company”), is for the 13 and 26 weeks

ended December 28, 2019. It is supplemental to, and should be read in conjunction with, the Annual Information

Form filed on November 12, 2019 (the “Annual Information Form”) on www.sedar.com, the Company’s unaudited

interim condensed consolidated financial statements and the accompanying notes for the 13 and 26 weeks ended

December 28, 2019, and the Company’s audited consolidated financial statements for the 52 weeks ended June 29,

2019. The Company’s unaudited interim condensed consolidated financial statements are prepared in accordance

with International Financial Reporting Standards (“IFRS”).

This MD&A is presented as of February 26, 2020 unless otherwise noted.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This MD&A includes “forward-looking information” and “forward-looking statements” within the meaning of

Canadian securities laws and United States securities laws (collectively, “forward-looking information”). All

information, other than statements of historical facts, included in this MD&A that addresses activities, events or

developments that the Company expects or anticipates will or may occur in the future is forward-looking information.

Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”,

“plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and includes, among others, information

and statements regarding:

the business, revenue, results and future activities of, and developments related to, the Company after the date of

this MD&A, including planned reductions of operating (including marketing) and capital expenses,

future business strategy, competitive strengths, goals, future expansion and growth of the Company’s business

and operations,

the successful implementation of cost reduction strategies and plans and any targets for such strategies and plans,

the target of achieving a $65.0 million Corporate SG&A annualized run-rate by the end of the fiscal third quarter

of 2020,

the target of generating positive EBITDA during the calendar year 2020,

expectations to continue to eliminate layers in the organization,

expected increases in gross margins, implementing a cost rationalization program, and other considerations that

could impact achieving positive EBITDA,

the completion and timing of the contemplated acquisitions, including the contemplated acquisition of the

membership interests of an entity from PharmaCann, LLC (“PharmaCann”),

the contemplated sale of certain real estate properties in one or more sale and leaseback transactions, and stated

expectations regarding whether such proposed transactions will be consummated and the conditions to the

consummation of such proposed transactions, including leases to be entered into at market rates,

whether any other proposed transactions will be completed on the current terms and contemplated timing,

expectations for the effects of any such proposed transactions, including the potential number and location of

dispensaries or licenses to be acquired,

the ability of the Company to successfully achieve its business objectives as a result of completing such proposed

acquisitions,

the contemplated use of proceeds remaining from previously completed capital raising activities,

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the application for additional licenses and the grant of licenses or renewals of existing licenses for which the

Company has applied or expects to apply,

the rollout of new dispensaries, including as to the number of planned dispensaries to be opened in the future and

the timing and location in respect of the same, and related forecasts,

the expansion of existing cultivation and production facilities,

the completion of cultivation and production facilities that are in the planning phase or under construction,

the expansion into additional markets,

estimates of future cultivation, manufacturing and extraction capacity,

expectations as to the development and distribution of the Company’s brands and products,

new revenue streams,

the impact of the Company’s digital and online strategy,

the expansion of the Company’s in-store pickup service,

the ability of the Company to successfully execute its strategic plans,

any changes to the business or operations as a result of any potential future legalization of adult-use and/or medical

cannabis under U.S. federal law,

expectations of market size and growth in the United States and the states in which the Company operates or

contemplates future operations and the effect that such growth will have on the Company’s financial performance,

statements that imply or suggest that returns may be experienced by investors or the level thereof,

expectations for other economic, business, regulatory and/or competitive factors related to the Company or the

cannabis industry generally, and

other events or conditions that may occur in the future.

Readers are cautioned that forward-looking information and statements are not based on historical facts but instead

are based on assumptions, estimates, analysis and opinions of management of the Company at the time they were

provided or made in light of its experience and its perception of trends, current conditions and expected developments,

as well as other factors that management believes to be relevant and reasonable in the circumstances, and involve

known and unknown risks, uncertainties and other factors which may cause the actual results, performance or

achievements of the Company, as applicable, to be materially different from any future results, performance or

achievements expressed or implied by such forward-looking information and statements.

Forward-looking information and statements are not a guarantee of future performance and are based upon estimates

and assumptions of management at the date the statements are made including among other things estimates and

assumptions about:

contemplated dispositions being completed on the current terms and current contemplated timeline,

development costs remaining consistent with budgets,

the ability to raise sufficient capital to advance the business of the Company and to fund planned operating and

capital expenditures and acquisitions,

the ability to manage anticipated and unanticipated costs,

achieving the anticipated results of the Company’s strategic plans,

increasing gross margins, including relative to increases in revenue,

the amount of savings expected from cost-cutting measures and divestitures of non-core assets, including the

impact on Corporate SG&A and EBITDA,

favorable equity and debt capital markets,

the availability of future funding under the Company’s equity and debt finance facilities,

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stability in financial and capital markets,

the ability to sustain negative operating cash flows until profitability is achieved,

the ability to satisfy operational and financial covenants under the Company’s existing debt obligations,

favorable operating and economic conditions,

political and regulatory stability,

obtaining and maintaining all required licenses and permits,

receipt of governmental approvals and permits,

sustained labor stability,

favorable production levels and sustainable costs from the Company’s operations,

consistent or increasing pricing of various cannabis products,

the ability of the Company to negotiate favorable pricing for the cannabis products supplied to it,

the level of demand for cannabis products, including the Company’s and third-party products sold by the

Company,

the continuing availability of third-party service providers, products and other inputs for the Company’s

operations, and

the Company’s ability to conduct operations in a safe, efficient and effective manner.

While the Company considers these estimates and assumptions to be reasonable, the estimates and assumptions are

inherently subject to significant business, social, economic, political, regulatory, competitive and other risks and

uncertainties, contingencies and other factors that could cause actual performance, achievements, actions, events,

results or conditions to be materially different from those projected in the forward-looking information and statements.

Many estimates and assumptions are based on factors and events that are not within the control of the Company and

there is no assurance they will prove to be correct.

Risks, uncertainties and other factors which may cause the actual results, performance or achievements of the

Company, as applicable, to be materially different from any future results, performance or achievements expressed or

implied by such forward-looking information and statements include, among others:

risks and uncertainties relating to Chairman, Ben Rose, holding voting control over all outstanding Class A Super

Voting Shares of the Company,

risks and uncertainties related to the agreement in place with Gotham Green Partners, whereby Gotham Green

Partners has the right to approve a majority of the Company’s Board of Directors,

uncertain and changing U.S. regulatory landscape and enforcement related to cannabis, including political risks,

the inability to raise necessary or desired funds,

the inability to satisfy operational and financial covenants under the Company’s existing debt obligations and

other ongoing obligations as they become payable,

funds being raised on terms that are not favorable to the Company, to the ability to operate the Company’s

business or to existing shareholders,

the inability to consummate the proposed dispositions and the inability to obtain required regulatory approvals

and third-party consents and the satisfaction of other conditions to the consummation of the proposed dispositions

on the proposed terms and schedule,

the potential adverse impacts of the announcement or consummation of the proposed dispositions on relationships,

including with regulatory bodies, employees, suppliers, customers and competitors,

the diversion of management time on the proposed dispositions,

risks related to future acquisitions or dispositions, resulting in unanticipated liabilities,

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reliance on the expertise and judgment of senior management of the Company,

adverse changes in public opinion and perception of the cannabis industry,

risks relating to anti-money laundering laws and regulation,

risks of new and changing governmental and environmental regulation,

risk of costly litigation (both financially and to the brand and reputation of the Company and relationships with

third parties),

risks related to contracts with and the inability to satisfy obligations to third-party service providers,

risks related to the unenforceability of contracts,

the limited operating history of the Company,

risks inherent in an agricultural business,

risks related to proprietary intellectual property and potential infringement by third parties,

risks relating to financing activities including leverage,

the inability to effectively manage growth,

errors in financial statements and other reports,

costs associated with the Company being a publicly-traded company, including given the loss of foreign private

issuer status under U.S. securities laws,

the dilutive impact of raising additional financing through equity or convertible debt given the decline in the

Company’s share price,

increasing competition in the industry,

increases in energy costs,

risks associated with cannabis products manufactured for human consumption, including potential product recalls,

inputs, suppliers and skilled labor being unavailable or available only at uneconomic costs,

breaches of and unauthorized access to the Company’s systems and related cybersecurity risks,

constraints on marketing cannabis products,

fraudulent activity by employees, contractors and consultants,

tax and insurance related risks, including any changes in cannabis or cultivation tax rates,

risks related to the economy generally,

conflicts of interest of management and directors,

failure of management and directors to meet their duties to the Company, including through fraud or breaches of

their fiduciary duties,

risks relating to certain remedies being limited and the difficulty of enforcement of judgments and effect service

outside of Canada,

sales by existing shareholders negatively impacting market prices,

the limited market for securities of the Company,

limited research and data relating to cannabis, and

those risk factors discussed elsewhere herein and in the Annual Information Form, the short form base shelf

prospectus filed on March 26, 2019 and the press release of the Company dated December 11, 2019 available

under the Company’s profile on www.sedar.com.

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Readers are cautioned that the foregoing lists are not exhaustive of all factors, estimates and assumptions that may

apply to or impact the Company’s results. Although the Company has attempted to identify important factors that

could cause actual results to differ materially from the forward-looking information and statements contained in this

MD&A, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no

assurance that such forward-looking information and statements will prove to be accurate as actual results and future

events could differ materially from those anticipated in such information and statements. Accordingly, readers should

not place undue reliance on forward-looking information and statements. The forward-looking information and

statements contained herein are presented to assist readers in understanding the Company’s expected financial and

operating performance and the Company’s plans and objectives and may not be appropriate for other purposes.

The forward-looking information and statements contained in this MD&A represent the Company’s views and

expectations as of the date of this MD&A unless otherwise indicated. The Company anticipates that subsequent events

and developments may cause its views and expectations to change. However, while the Company may elect to update

such forward-looking information and statements at a future time, it has no current intention of and assumes no

obligation for doing so, except to the extent required by applicable law.

Readers should read this MD&A and the documents that the Company references herein and has filed at

www.sedar.com completely and with the understanding that the Company’s actual future results may be materially

different from what it expects.

Basis of Presentation

The unaudited interim condensed consolidated financial statements of the Company for the 13 and 26 weeks ended

December 28, 2019 have been prepared in accordance with IFRS as issued by the International Accounting Standards

Board (“IASB”). Certain financial measures contained in this MD&A are non-IFRS financial measures and are

discussed further under “Non-IFRS Financial Measures” below.

All references to “$” and “dollars” refer to U.S. dollars. References to C$ refer to Canadian dollars. Certain totals,

subtotals and percentages throughout this MD&A may not reconcile due to rounding.

Change in Fiscal Year-End

The Company changed its fiscal year-end from a fiscal year ending on June 30 to a 52/53-week year ending on the

last Saturday in June, effective beginning with fiscal year 2019. In a 52-week fiscal year, each of the Company’s

quarterly periods will comprise 13 weeks. The additional week in a 53-week fiscal year is added to the fourth quarter,

making such a quarter consist of 14 weeks. The Company’s first 53-week fiscal year will occur in fiscal year 2024.

The Company believes the change in fiscal year provides numerous benefits, including aligning the Company’s

reporting periods to be more consistent and improving comparability between periods.

The fiscal second quarter of 2020 began on September 29, 2019 and ended on December 28, 2019 and is referred to

throughout this report as the “13 weeks ended December 28, 2019” or the “fiscal second quarter of 2020”. The

comparative period, or the fiscal second quarter of 2019, is the 13 weeks ended December 29, 2018. The 13 weeks

ended December 28, 2019 have the same number of operating days as the comparable interim period in the prior year.

Prior Period Adjustment

During the 52 weeks ended June 29, 2019, the Company identified a prior period adjustment related to accounting for

deferred tax liabilities arising from its acquisitions during prior years. As such, the Company has retrospectively

restated the previously reported consolidated financial statements to reflect the understated amounts. Refer to “Note

21 – Prior Period Adjustment” of the unaudited interim condensed consolidated financial statements for the 13 and

26 weeks ended December 28, 2019.

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Transition to United States Generally Accepted Accounting Principles (“U.S. GAAP”)

The Company is required by the U.S. Securities and Exchange Commission (“SEC”) to test whether it continues to

qualify as a foreign private issuer as of the last business day of every fiscal second quarter. As of December 28, 2019,

the Company no longer met the qualification as a foreign private issuer as a result of more than 50% of the Company’s

outstanding voting securities being held by residents of the United States. Effective June 27, 2020, MedMen will be

considered a United States domestic issuer and an accelerated filer under the rules of the SEC. Accordingly, the

Company will prepare its audited consolidated financial statements for the 52 weeks ended June 27, 2020 in

accordance with U.S. GAAP, with such change being applied retrospectively. The extent of the impact of this change

in accounting framework has not yet been quantified by the Company.

Market and Industry Data

Unless otherwise indicated, the market and industry data contained in this MD&A are based upon information from

independent industry publications, market research, analyst reports and surveys, and other publicly available sources.

Actual outcomes may vary materially from those forecast in such market or industry data, and the prospect for material

variation can be expected to increase as the length of time of the forecast period increases. Although the Company

believes these sources to be generally reliable, market and industry data is subject to interpretation and cannot be

verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the

data gathering process and other limitations and uncertainties inherent in any survey. The Company has not

independently verified any of the data from third-party sources referred to herein and accordingly, the accuracy and

completeness of such data is not guaranteed.

ABOUT MEDMEN

Corporate Structure

MedMen Enterprises Inc. was incorporated in the Province of British Columbia under the Business Corporations Act

(British Columbia) on May 21, 1987.

The Company’s Class B Subordinate Voting Shares are listed on the Canadian Securities Exchange (the “CSE”) under

the symbol “MMEN”, on the OTCQX under the symbol “MMNFF”, on the Frankfurt Stock Exchange under the

symbol “OJS.F”, on the Stuttgart Stock Exchange under the symbol “OJS.SG”, on the Munich Stock Exchange under

the symbol “OJS.MU”, on the Berlin Stock Exchange under the symbol “OJS.BE” and on the Dusseldorf Stock

Exchange under the symbol “OJS.DU”.

The Company operates through its wholly-owned subsidiaries, MM CAN USA, Inc., a California corporation (“MM

CAN” or “MedMen Corp”), and MM Enterprises USA, LLC, a Delaware limited liability company (“MM

Enterprises USA”).

MM CAN converted into a California corporation from a Delaware corporation on May 16, 2018 and is based in

Culver City, California. The head office and principal address of MM CAN is 10115 Jefferson Boulevard, Culver

City, California 90232.

MM Enterprises USA was formed on January 9, 2018 and is based in Culver City, California. The head office and

principal address of MM Enterprises USA is 10115 Jefferson Boulevard, Culver City, California 90232.

The MedMen Group of Companies was comprised of the following companies: MMMG LLC; MMOF Downtown

Collective, LLC; MMOF Venice, LLC; MMOF Venice Collective, LLC; Project Compassion Venture, LLC; The

MedMen of Nevada 2, LLC; Project Mustang Development, LLC; Desert Hot Springs Green Horizon, Inc.; and

Manlin DHS Development, LLC.

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On January 29, 2018, pursuant to a Formation and Contribution Agreement (the “Agreement”), a roll-up transaction

was consummated whereby the assets and liabilities of The MedMen Group of Companies were transferred into MM

Enterprises USA. In return, the vendors of the businesses of The MedMen Group of Companies received 217,184,382

MM Enterprises USA Class B Units. The Agreement was entered into by and among MM Enterprises Manager, LLC,

the sole manager of MM Enterprises; MMMG LLC (“MMMG”); MedMen Opportunity Fund, LP (“Fund I”);

MedMen Opportunity Fund II, LP (“Fund II”); The MedMen of Nevada 2 LLC (“MMNV2”); DHSM Investors, LLC

(“DHS Owner”); and Bloomfield Partners Utica, LLC (“Utica Owner”). On May 28, 2018, a reverse takeover of

Ladera Ventures Corp. was completed by MM Enterprises USA (the “Business Combination”). This Business

Combination resulted in a reorganization of MM Enterprises USA and Ladera Ventures Corp. pursuant to which

Ladera became the indirect parent of MM Enterprises USA and Ladera changed its name to “MedMen Enterprises

Inc.” On May 29, 2018, the Company’s Class B Subordinate Voting Shares began trading on the Canadian Securities

Exchange under the ticker “MMEN”.

References herein to “MedMen Enterprises”, “MedMen” or the “Company”, “we”, “us” or “our” as of a date or a

period of time prior to January 29, 2018 refer to The MedMen Group of Companies. References on or after January

29, 2018 through May 28, 2018 refer to MM Enterprises USA and its subsidiaries. References on or after May 28,

2018 refer to MedMen Enterprises Inc. and its subsidiaries.

Summary Description of the Business

MedMen is a cannabis retailer with operations across the U.S. and flagship stores in Los Angeles, Las Vegas and New

York. MedMen is currently licensed for up to 66 locations across eight states, including licenses to be acquired through

pending acquisitions and applications for licenses that the Company has a degree of certainty of receiving and

excluding existing licenses in Arizona, which were classified as assets held for sale. This geographic footprint includes

the Company’s industry-leading California retail network of seventeen licenses, of which twelve locations are

currently open. MedMen has eight retail stores open in the state of Florida, where the Company is licensed for up to

35 stores. MedMen also cultivates, manufactures and sells three wholly-owned house brands – [statemade], LuxLyte

and MedMen Red.

Company Mission

MedMen is dedicated to providing an unparalleled experience that invites the consumer to discover the remarkable

benefits of cannabis. The Company is building the future of cannabis as a consumer product because it believes that

a world where cannabis is legal and regulated is safer, healthier and happier.

Today, MedMen is one of the most recognized names in the industry and is associated with state-of-the-art retail, best-

in-class curated product offerings and an uncompromising commitment to quality. Its talented team of over 1,000

employees is bringing operational excellence to every market it serves, solving the technical challenges of a

fragmented and evolving regulatory framework, and challenging cultural perceptions with disruptive marketing

campaigns that are breaking down the stigma of cannabis.

MedMen’s retail strategy is focused on the quality of licenses over quantity, with strategic locations in the most

important markets. As the Company continues to convert its high-value licenses into operational stores, it remains

uncompromising in its commitment to the customer experience, from its award-winning retail design to the

presentation of its robust product offerings. MedMen’s business model allows it to directly control quality and capture

higher margins. The Company recently furthered its commitment to defining the cannabis industry by creating a first-

of-its-kind customer loyalty program, called MedMen Buds, and has now launched delivery services in California.

National Impact of the Brand

MedMen stores have drawn customers from all 56 U.S. States and Territories/Protectorates. Not only does this

highlight the power of the MedMen brand, but also the importance of its location-based real estate strategy. While the

majority of the Company’s business comes from California residents, the top five (non-local) states its stores draw

tourists from are New York, Texas, Florida, Illinois and Arizona – the majority of which are states MedMen operates

in.

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Retail Defensibility

MedMen is uniquely focused on the retail component as the primary expression of its brand experience. The

Company’s retail network is a key differentiator in each state and positions the Company’s wholly-owned brands for

greater speed to market. Below are highlights of the Company’s retail, cultivation and manufacturing, corporate

selling, general and administrative expenses (“SG&A”) and pre-opening expenses. For the fiscal second quarter of

2020, the Company is providing detail with respect to earnings before interest, taxes, depreciation and amortization

(“EBITDA”) attributable to the Company’s national retail, California retail, cultivation and manufacturing, Corporate

SG&A and pre-opening expenses to show how it is leveraging its retail footprint and strategically investing in the

future.

Key Business Metrics for Continuing Operations – Fiscal Second Quarter of 2020 Compared to Fiscal First

Quarter of 2020

National Retail

The table below highlights the Company’s national Four Wall Retail EBITDA Margin (Non-IFRS), which excludes

corporate marketing expenses, which are included in the Corporate SG&A section, and local cannabis and excise

taxes. The information presented does not include the Company’s operations in the state of Arizona, which were

classified as discontinued operations. See the “Recent Developments” section for further information.

For the fiscal second quarter of 2020, system-wide retail revenue was $43.9 million across the Company’s operations

in California, Nevada, New York, Illinois and Florida. This represents an 11% increase over the fiscal first quarter of

2020 of $39.6 million. Importantly, the Company’s California retail locations reported a combined $32.4 million in

revenue, up 8% versus the prior quarter. The increase in system-wide retail revenue was driven primarily by the

increased number of operational retail stores in Florida and Illinois during the fiscal second quarter of 2020.

The Company had an aggregate Four Wall Retail Adjusted EBITDA Margin Rate (Non-IFRS) of (8%). This

represented a decrease versus the 4% realized in the fiscal first quarter of 2020. While Four Wall Retail Gross Margin

(Non-IFRS) remained relatively consistent with 51% in the fiscal second quarter of 2020 as compared to 52% in the

fiscal first quarter of 2020, the Four Wall Retail Adjusted EBITDA Margin Rate (Non-IFRS) decreased primarily due

to expansion into Florida with the addition of four operating retail stores resulting in increased payroll expenses and

local taxes in the fiscal second quarter of 2020. Excluding local taxes and distribution expenses, Four Wall Retail

EBITDA Margin Rate (Non-IFRS) would have been 5% in the fiscal second quarter of 2020 versus 11% in the fiscal

first quarter of 2020.

December 28, September 28,

($ in Millions) 2019 2019 $ Change % Change

Consolidated Revenue (IFRS) 44.1$ 39.7$ 4.4$ 11%

Less: Non-Retail Revenue (IFRS) 0.2 0.1 0.1 100%

Retail Revenue (Non-IFRS) 43.9 39.6 4.3 11%

Consolidated Cost of Goods Sold (IFRS) 39.5 16.8 22.7 135%

Less: Non-Retail Cost of Goods Sold (IFRS) 17.8 (2.1) 19.9 948%

Retail Cost of Goods Sold (Non-IFRS) 21.7 18.9 2.8 15%

Four Wall Retail Gross Margin (Non-IFRS) 22.2 20.7 1.5 7%

Four Wall Retail Gross Margin Rate (Non-IFRS) 51% 52% (1%) (2%)

Direct Store Operating Expenses (IFRS) 20.2 16.5 3.7 22%

Four Wall Retail EBITDA Margin (Non-IFRS) 2.0$ 4.2$ (2.2)$ (52% )

Four Wall Retail EBITDA Margin Rate (Non-IFRS) 5% 11% (6%) (57%)

Local Taxes (IFRS) and Distribution Expenses (IFRS) 5.4 2.5 2.9 116%

Four Wall Retail Adjusted EBITDA Margin (Non-IFRS) (3.4)$ 1.7$ (5.1)$ (300% )

Four Wall Retail Adjusted EBITDA Margin Rate (Non-IFRS) (8%) 4% (12%) (300%)

13 Weeks Ended

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California Retail

The Company’s core competency is in constructing and operating retail commercial cannabis dispensaries. The

business operations of the Company in California are the most mature and reflect, in management’s opinion, the

business model that is intended to be replicated in other regions as law and regulations allow.

For the fiscal second quarter of 2020, California Retail Revenue (Non-IFRS) was $32.4 million. This represents an

8% increase over the fiscal first quarter of 2020 of $30.0 million. California Retail Cost of Goods Sold (Non-IFRS)

for the fiscal second quarter of 2020 was $15.7 million, representing a 12% increase over the fiscal first quarter of

2020 of $14.0 million. The increases in California Retail Revenue (Non-IFRS) and California Retail Cost of Goods

Sold (Non-IFRS) were primarily due to the conversion of the Company’s California retail licenses into operational

stores during the fiscal second quarter of 2020. More specifically, the Long Beach, California retail store began

operations in the last month of fiscal first quarter of 2020 and was fully operational during the fiscal second quarter

of 2020.

The Company’s California retail operations generated a Four Wall California Retail Adjusted EBITDA Margin Rate

(Non-IFRS) of 0% in the fiscal second quarter of 2020, representing a decrease versus 10% in the fiscal first quarter

of 2020. The decrease in the Four Wall California Retail Adjusted EBITDA Margin Rate (Non-IFRS) was driven by

increased local taxes and labor costs compared to the fiscal first quarter of 2020. Excluding local taxes and distribution

expenses, Four Wall California Retail EBITDA Margin Rate (Non-IFRS) would have been 16% in the fiscal second

quarter of 2020 versus 17% in the fiscal first quarter of 2020. In California, Average Dollar Sale, defined as the average

pre-tax purchase amount per customer per visit, was $73.15 for the fiscal second quarter of 2020, compared to $75.32

for the fiscal first quarter of 2020.

The table below highlights the Company’s Four Wall California Retail EBITDA Margin (Non-IFRS). Four Wall

California Retail EBITDA Margin (Non-IFRS) excludes corporate marketing expenses, which are included in the

Corporate SG&A section, and local cannabis and excise taxes.

December 28, September 28,

($ in Millions) 2019 2019 $ Change % Change

Consolidated Revenue (IFRS) 44.1$ 39.7$ 4.4$ 11%

Less: Non-Retail and Retail Revenue Outside California (IFRS) 11.7 9.7 2.0 21%

California Retail Revenue (Non-IFRS) 32.4 30.0 2.4 8%

Consolidated Cost of Goods Sold (IFRS) 39.5 16.8 22.7 135%

Less: Non-Retail Cost of Goods Sold and

Retail Cost of Goods Sold Outside of California (IFRS) 23.8 2.8 21.0 750%

California Retail Cost of Goods Sold (Non-IFRS) 15.7 14.0 1.7 12%

Four Wall California Retail Gross Margin (Non-IFRS) 16.7 16.0 0.7 4%

Four Wall California Retail Gross Margin Rate (Non-IFRS) 52% 53% (1%) (2%)

California Direct Store Operating Expenses (IFRS) 11.6 10.8 0.8 7%

Four Wall California Retail EBITDA Margin (Non-IFRS) 5.1$ 5.2$ (0.1)$ (2% )

Four Wall California Retail EBITDA Margin Rate (Non-IFRS) 16% 17% (1%) (6%)

Local Taxes (IFRS) and Distribution Expenses (IFRS) 5.1 2.2 2.9 132%

Four Wall California Retail Adjusted EBITDA Margin (Non-IFRS) -$ 3.0$ (3.0)$ (100% )

Four Wall Retail Adjusted EBITDA Margin Rate (Non-IFRS) 0% 10% (10%) (100%)

13 Weeks Ended

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Cultivation and Manufacturing

MedMen's cultivation and manufacturing operations are primarily focused on the commercialization of cannabis (both

medical and recreational, as permitted under applicable laws) and contributes to the Company's retail supply chain.

For the 13 weeks ended December 28, 2019, revenue from cultivation and manufacturing operations was $0.1 million,

consistent with $0.1 million for the 13 weeks ended September 28, 2019. The Adjusted EBITDA Loss from

Continuing Operations (Non-IFRS) for the fiscal second quarter of 2020 was $11.4 million, compared to the $0.1

million Adjusted EBITDA Gain from Continuing Operations (Non-IFRS) for the fiscal first quarter of 2020. The

increase in Adjusted EBITDA Loss from Continuing Operations (Non-IFRS) was driven primarily by increased cost

of goods sold as a result of the Company’s increasing cultivation operations and reclassifications between cost of

goods sold and the unrealized gain on changes in fair value of biological assets during the 13 weeks ended December

28, 2019. More specifically, the cultivation and production facility in Desert Hot Springs, California began cultivation

operations during the fiscal second quarter of 2020.

Corporate SG&A

Corporate-level general and administrative expenses across various functions including Corporate Development,

Licensing, Compliance, Government Affairs, Legal, Real Estate, Marketing, Operations, Retail Corporate,

Accounting and Finance, Human Resources, Technology, Project Management and Security (collectively referred to

as “Corporate SG&A”) are combined to account for a significant proportion of the Company’s total general and

administrative expenses.

On December 11, 2019, the Company announced a plan to reduce Corporate SG&A to an annualized run-rate of $65.0

million by the end of the fiscal third quarter of 2020. Adjusted EBITDA Loss from Continuing Operations (Non-

IFRS) relating to Corporate SG&A of $26.8 million in the fiscal second quarter of 2020 represented a 11% decrease

from the $30.1 million that Corporate SG&A contributed to Adjusted EBITDA Loss from Continuing Operations

(Non-IFRS) in the fiscal first quarter of 2020. The largest driver of the sequential improvement was a reduction in

headcount and marketing related expenses. The Company expects additional improvements in reduction of Corporate

SG&A in the upcoming quarters upon execution of its strategic plan to generate positive EBITDA by the end of

calendar year 2020. The Company also expects to generate over $20.0 million in estimated annual savings through

the reduction in marketing and technology spend.

December 28, September 28,

($ in Millions) 2019 2019 $ Change % Change

Revenue 0.1$ 0.1$ -$ 0%

Adjusted EBITDA (Loss) Gain from

Continuing Operations (Non-IFRS) (11.4)$ 0.1$ (11.5)$ (11,500%)

13 Weeks Ended

December 28, September 28,

($ in Millions) 2019 2019 $ Change % Change

Corporate SG&A as a Component

of Adjusted EBITDA Loss from

Continuing Operations (Non-IFRS) (26.8)$ (30.1)$ 3.3$ (11%)

13 Weeks Ended

11

Pre-Opening Expenses

Given the highly restrictive zoning for cannabis retail and the first mover advantage that exists for securing real estate,

the Company has frequently entered into leases and prepays rent for locations in advance of opening stores.

Pre-opening expenses contributed $4.5 million to Adjusted EBITDA Loss from Continuing Operations (Non-IFRS)

for the fiscal second quarter of 2020 compared to $5.5 million for the fiscal first quarter of 2020. The sequential

improvement was primarily driven by a decrease in rent expenses as a result of the slowdown in mergers and

acquisitions as part of the Company’s strategic plan to focus on limiting cash outlays.

Marketing

MedMen continues to be focused on providing a superior retail experience for its consumers. As the Company evolves

its marketing strategy into building authentic interactions and engaging in meaningful dialogue with customers, it

believes its brand purpose – that a world where cannabis is legal and regulated is safer, healthier and happier – will

continue to grow a community of consumers and advocates. Going forward, the Company will reduce its overall

marketing spend and focus its marketing investments on high-return on investment initiatives that drive sales.

Redefining cannabis retail for its community has been a priority for the Company since its inception. MedMen is held

to the highest standard by its customers as it offers premium goods and services, and as such the Company takes great

pride in the success of a fully-owned and operated delivery service in California. MedMen’s marketing strategy is

focused on consumer engagement through digital content, retail programming and retail partnerships that have an

identifiable impact on store visits and result in actual customer sales.

As part of its efforts to enhance the customer experience, MedMen Buds, the first-in-category rewards program,

continues to grow daily with members across California, Florida and Nevada. MedMen believes that in the current

retail landscape building loyalty of core customers is a key driver of continued growth. The Company’s understanding

of what customers value, and how it can meet those needs, is critical in deepening its connection with return customers.

December 28, September 28,

($ in Millions) 2019 2019 $ Change % Change

Pre-Opening Expenses as a Component

of Adjusted EBITDA Loss from

Continuing Operations (Non-IFRS) (4.5)$ (5.5)$ 1.0$ (18%)

13 Weeks Ended

12

MedMen works diligently to identify emerging market trends and is always looking to the current cannabis culture

for inspiration. With that in mind, MedMen activates events and experiences with influencers in music, film, fashion

and lifestyle verticals that drive customers to its retail experience. As cannabis gains popularity and credibility across

these categories, MedMen aims to become a leading lifestyle destination that builds community and relevant

touchpoints with its consumers.

MedMen continues to tell its brand story through its products – MedMen Red, [statemade] and LuxLyte. The

Company’s expanded product portfolio allows it to connect the MedMen curation story to a quality product offering.

As one of the first-to-market flower retailers in the state of Florida, MedMen is positioned ahead of its competitors in

the medical market. With the launch of [statemade] in Nevada and California, MedMen’s overall growth is fostered

by its lifestyle positioning in recreational markets. With continued focus on delivering the best retail experience in

cannabis through industry-leading staff and five-star hospitality, MedMen is poised for significant achievements in

the coming year.

Recent Developments

Strategic Partnership with Gotham Green Partners

On April 23, 2019, the Company secured a senior secured convertible credit facility (the “GGP Facility”) to provide

up to $250.0 million in gross proceeds, arranged by Gotham Green Partners (“GGP”). The GGP Facility has been

accessed to date through issuances to the lenders of convertible senior secured notes (“GGP Notes”) co-issued by the

Company and MM CAN, which are issuable in an aggregate amount of up to $250.0 million. Refer to “Note 17 –

Senior Secured Convertible Credit Facility” of the unaudited interim condensed consolidated financial statements for

the 13 and 26 weeks ended December 28, 2019.

On August 12, 2019, the Company and the lenders executed amendments to the GGP Facility and, as a result, the

Company committed to pay an amendment fee of $18.8 million, which was subsequently converted into additional

GGP Notes (the “Amendment Fee Notes”).

On October 29, 2019, the Company further amended the GGP Facility (the “Second Amendment”) wherein certain

reporting and financial covenants were modified. The amount of available credit in the remaining tranches was

amended to $10.0 million for Tranche 3 and $115.0 million for Tranche 4. The aggregate amount available to be

borrowed with the consent of the lenders remained the same. Further, the Amendment provided that the funding of

Tranche 4 will require the consent of both the Company and the lenders under the GGP Facility. On October 29, 2019,

the Company issued the Amendment Fee Notes in the principal amount of $18.8 million with a conversion price of

$1.28 per Class B Subordinate Voting Share. On November 27, 2019, the Company issued an additional $10.0 million

of GGP Notes under Tranche 3. Among other changes, the Amendment provides greater flexibility to the Company

by:

Allowing the pre-payment at any time following the Second Amendment, in whole or in part, of the then

outstanding principal amount together with accrued and unpaid interest and fees;

Permitting certain subsidiaries of the Company to incur additional secured debt;

Permitting the sale of certain non-core assets; and

Removing the senior debt to market capitalization ratio test covenant.

While the GGP Notes are outstanding, the lenders will be entitled to the collective rights to (a) nominate an individual

to the Board of Directors of the Company, and (b) appoint a representative to attend all meetings of the Board of

Directors in a non-voting observer capacity. Pursuant to the Side Letter executed on October 29, 2019 in conjunction

with the Second Amendment, GGP has the right to nominate a majority of the Company’s Board of Directors while

the aggregate principal amount outstanding under the GGP Notes being more than $25.0 million.

Secured Term Loan Amendment

On December 10, 2019, the Company executed a binding term sheet in respect of certain amendments to the definitive

agreement for the $77.8 million senior secured term loan (the “October 2018 Loan”) with funds managed by Stable

Road Capital and its affiliates (the “Term Loan Lenders”). The Company subsequently announced the execution and

closing of definitive documentation on January 14, 2020. Amendments included:

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The maturity date was extended to January 31, 2022.

To reflect current market conditions, the interest rate was increased from a fixed rate of 7.5% per annum,

payable monthly in cash, to a fixed rate of 15.5% per annum, of which 12.0% will be payable monthly in

cash based on the outstanding principal and 3.5% will accrue monthly to the principal amount of the debt as

a payment-in-kind.

The Company may prepay without penalty, in whole or in part, at any time and from time to time, the amounts

outstanding under the October 2018 Loan (on a non-revolving basis) upon 15 days’ notice. MM CAN, a subsidiary of the Company, cancelled the existing warrants issued to the Term Loan Lenders,

being 16,211,284 warrants exercisable at $4.97 per share and 1,023,256 warrants exercisable at $4.73 per

share, and issued to the Term Loan Lenders a total of 40,455,729 warrants with an exercise price of $0.60

per share that are exercisable until December 31, 2022. The new warrants issued to the Term Loan Lenders

may be exercised at the election of their holders on a cashless basis.

Equity Placement

On January 14, 2020, the Company announced the closing of its previously announced approximately $20.0 million

non-brokered offering of Class B Subordinate Voting Shares (the “Equity Placement”). The Equity Placement was

funded and closed in tranches, with the final closing occurring on January 13, 2020. As a result, 46,962,645 Class B

Subordinate Voting Shares were issued in the Equity Placement at a price of $0.43 per Class B Subordinate Voting

Share. Certain of the shares issued pursuant to the Equity Placement will be subject to a hold period of four months

from the applicable closing date. Participants in the Equity Placement included existing investor, Wicklow Capital,

and certain insiders of the Company, being Adam Bierman, a director of the Company and former Chief Executive

Officer, Andrew Modlin, the Chief Brand Officer of the Company, and Christopher Ganan, the Chief Strategy Officer

of the Company. Such insiders of the Company subscribed for and purchased an aggregate of 4,651,161 of such Class

B Subordinate Voting Shares, for aggregate proceeds of $2.0 million, comprising approximately 10% of the total

amount raised. Proceeds raised from the Equity Placement are contemplated to be used to finance working capital

requirements and to execute on the Company’s retail footprint expansion plans in its core geographic markets.

At-the-Market Equity Financing Program

On April 10, 2019, the Company established an At-the-Market equity financing program (the “ATM Program”) with

Canaccord Genuity Corp. (“Canaccord”) pursuant to which the Company may, from time to time, sell Class B

Subordinate Voting Shares at prevailing trading prices at the time of sale for aggregate gross proceeds of up to

C$60,000,000. Since Class B Subordinate Voting Shares are distributed under the ATM Program at trading prices

prevailing at the time of sale, prices may vary between purchasers and during the period of distribution. The Company

has used and intends to use the net proceeds from the sale of Class B Subordinate Voting Shares under the ATM

Program principally for general and administrative expenses, working capital needs and other general corporate

purposes.

During the fiscal second quarter of 2020, the Company sold an aggregate of 4,684,200 Class B Subordinate Voting

Shares under the ATM Program, for aggregate gross proceeds of C$4,405,591, with an average price per share of

C$0.94. In addition, an aggregate of C$88,112 was paid to Canaccord as its sales commission, resulting in aggregate

net proceeds to the Company of C$4,317,479.

Real Estate Sale of Interests

In November 2019, the Company completed the sale of its interests in the manager of the Treehouse Real Estate

Investment Trust for net proceeds of $12.5 million.

14

Termination of Merger Agreement with PharmaCann

On October 8, 2019, MedMen and PharmaCann, LLC announced the mutual agreement to terminate their business

combination (“Termination of Merger”) pursuant to a Termination and Release Agreement dated October 7, 2019

entered into between the Company, PharmaCann and the other parties thereto. In light of market developments over

the past year and the continued evolution of its business strategy, in completing the Termination of Merger, MedMen

believed that focusing on the Company’s retail brand, its leadership position in its core markets, including California,

and investing in its digital platform will create greater shareholder value than completing this transaction. As part of

the agreement to terminate, the Company and PharmaCann agreed to accept a transfer of assets in exchange for

repayment of the existing line of credit to PharmaCann (the “Line of Credit”), which totaled approximately $21.0

million, including accrued interest. The assets transferred were 100% of the membership interests in three entities

(“Transfer of Interests”) holding the following assets:

Operational cultivation and production facility in Hillcrest, Illinois and related licenses;

Retail location in Evanston, Illinois and related licenses;

Retail license for Greater Chicago, Illinois; and

License for a vertically-integrated facility in Staunton, Virginia.

In the event any Transfer of Interest is unable to occur due to a final adjudication or denial by the applicable regulatory

body governing the applicable license (a “Rejected Transfer”), PharmaCann is to pay MedMen an amount equal to

(i) one-third (1/3) of the aggregate principal amount and any corresponding accrued interest thereon owed under the

Line of Credit (such interest to be calculated as if no loan forgiveness of any portion of the Line of Credit occurred),

and (ii) $10.0 million (such amounts are collectively referred to as the “Rejected Transfer Fee”) for each denial. Any

such Rejected Transfer Fee is to be paid by PharmaCann within five days of the related Rejected Transfer, or,

PharmaCann may elect to finance the Rejected Transfer Fee, provided that the financed Rejected Transfer Fee will

accrue interest at a rate of 7.5% per annum and be due and payable on the first anniversary of the date of the Rejected

Transfer.

Subsequent to the Termination of Merger, the Transfer of Interests related to the license in Staunton, Virginia has

been completed. Furthermore, on December 2, 2019, the Company closed on its acquisition of PharmaCann’s

Evanston, Illinois location and the associated additional retail license for Greater Chicago. The Company began

operating the store in Evanston on December 3, 2019. Subsequent to December 28, 2019, the Company entered into

definitive agreements to assign its rights to acquire a cultivation and manufacturing license in Hillcrest, Illinois, and

the related facility, to be received as part of the Termination of Merger with PharmaCann. Of the total gross proceeds

of $17.0 million, the Company received partial proceeds of $10.0 million and the remaining payment of $7.0 million

is due prior to closing (subject to customary regulatory approvals).

Management Changes and Shareholder Meeting Results

On October 8, 2019, the Company announced that Michael Kramer’s employment as Chief Financial Officer had been

terminated. Zeeshan Hyder, previously MedMen’s Chief Corporate Development Officer, was appointed to the role

of Chief Financial Officer.

On October 11, 2019, the Company announced that Stacey Hallerman resigned from its Board of Directors to serve

as Chief Administrative Officer and General Counsel at Lowell Herb Co. (“Lowell”). Lowell was one of MedMen’s

first strategic investments in a cannabis brand when, in July 2018, the Company announced an investment in the parent

company of Lowell.

Subsequent to the fiscal second quarter of 2020, the Company announced that Adam Bierman resigned as Chief

Executive Officer of the Company. Effective February 1, 2020, Ryan Lissack, the Company’s Chief Technology

Officer, will serve as the Company’s interim Chief Executive Officer. Mr. Bierman continues to serve on the

Company’s Board of Directors. In addition, Andrew Modlin is no longer President of the Company or a member of

its Board of Directors. Effective January 30, 2020, Mr. Modlin’s title is Chief Brand Officer of the Company.

15

Effective February 1, 2020, Mr. Bierman and Mr. Modlin agreed to surrender all of their respective Class A Super

Voting Shares to the Company. Mr. Modlin’s surrender will automatically occur upon the expiration of the proxy

granted in December 2019 by Mr. Modlin to Ben Rose, Executive Chairman of the Board, which expiration is

contemplated to occur in December 2020. As a result, the Company will only have one class of outstanding shares,

the Class B Subordinate Voting Shares, by the end of calendar year 2020.

On February 21, 2020, the Company held an annual general meeting of shareholders at which the individuals

nominated by the Company, being Ben Rose, Adam Bierman, Jay Brown, Chris Ganan, Cameron Smith and Melvin

Elias, were elected as directors of the Company until the next annual general meeting of shareholders.

Plan to Achieve Positive EBITDA

On November 15, 2019, the Company announced a plan to generate positive EBITDA by the end of calendar year

2020. The plan consists of five key objectives:

1) Focusing on core markets, while divesting non-core assets;

2) Reducing Corporate SG&A;

3) Driving asset-level EBITDA;

4) Limiting cash outlays for the next twelve months; and

5) Reinvesting in the Company’s employees and culture.

Management believes the Company can execute this plan while still growing its retail presence and maintaining a

best-in-class retail experience. In conjunction with the plan, the Company announced that it laid off 190 employees,

including 80 corporate-level employees representing over 20% of its corporate employee base, and that it has

indefinitely postponed the buildout and expansion of retail stores that are not core to the business, resulting in $55.0

million of capital expenditures being put on hold. Furthermore, on December 11, 2019, the Company announced an

additional 20% layoff of its corporate-level employees and certain new and updated financial estimates. In total, the

Company has strategically reduced its corporate headcount by over 40% representing approximately $20.0 million in

annual salary-related savings.

Adoption of New Accounting Pronouncements Effective June 30, 2019

In January 2016, the IASB issued IFRS 16, “Leases” ("IFRS 16"), which replaces IAS 17, “Leases” and related

interpretations. The standard introduces a single lessee accounting model and requires lessees to recognize assets and

liabilities for all leases with a term exceeding twelve months, unless the underlying asset is insignificant. A lessee is

required to recognize a right-of-use asset representing its right to use the underlying asset and a lease liability

representing its obligation to make lease payments. The Company adopted the standard on June 30, 2019 using the

modified retrospective method, which provides lessees a method for recording existing leases at adoption with no

restatement of prior comparative periods.

The Company’s adoption of IFRS 16 resulted in higher non-current assets and current and non-current liabilities, the

replacement of rent expense previously recorded in cost of goods sold and general and administrative expense with

depreciation expense, and increased finance costs related to the accretion and interest expense of the lease liabilities.

The new standard does not change the amount of cash transferred between the lessor and lessees but impacts the

presentation of the Company’s operating and financing cash flows.

Discontinued Operations

On November 15, 2019, the Company announced its plan to sell its operations in the state of Arizona. The Company

intends to focus on deepening its retail market share in California, Nevada, Florida, Illinois, Massachusetts and New

York. As a result, assets and liabilities allocable to the operations within the state of Arizona were classified as held

for sale. In addition, revenue and expenses, gains or losses relating to the discontinuation of Arizona operations were

classified as discontinued operations and were eliminated from profit or loss from the Company’s continuing

operations for all periods presented. Discontinued operations are presented separately from continuing operations in

the unaudited interim condensed consolidated statements of operations and comprehensive loss and the unaudited

interim condensed consolidated statements of cash flows.

16

Retail Store Updates

As part of MedMen’s strategic plan to achieve its target of positive EBITDA by the end of calendar year 2020, the

Company will continue to focus its growth in core markets such as Los Angeles, Las Vegas, New York City, Miami

and Chicago where it already has operating leverage. As such, the Company will limit new store openings in 2020 to

stores with revenue potential that the Company believes is greater than $10.0 million within the first twelve months

of being operational. The Company will delay further investments in certain medical markets, which do not align with

the Company’s recreational retail strategy. As regulations shift, the Company will reevaluate additional investments.

The Company has engaged Canaccord Genuity Corp. to explore strategic alternatives for certain operations and

licenses in states that are currently deemed not critical to the Company’s retail footprint.

• Strong Florida Rollout. On October 15, 2019, MedMen opened a retail store in Jacksonville Beach, which is

the fifth location in the state of Florida. On October 25, 2019, the Company announced two additional store

openings in Orlando and Tallahassee, Florida. On November 11, 2019, the Company announced an additional

store opening in Sarasota, Florida, bringing its total footprint in Florida to eight stores. The Company expects

to open a retail location in the heart of South Beach Miami in early calendar 2020.

• Recreational Sales Commence in Illinois. Recreational sales commenced in the state of Illinois on January 1,

2020. On December 2, 2019, the Company closed on its acquisition of PharmaCann’s Evanston, Illinois

location. The Company began operating the store on December 3, 2019. Evanston is located north of downtown

Chicago and is home to Northwestern University. Through the acquisition of Seven Point earlier in the year,

the Company also operates a medical dispensary in Oak Park, Illinois. Due to regulatory changes and the

termination of the PharmaCann transaction, the Company expects to have a total of four operational

recreational stores in Illinois by the end of calendar year 2020. As part of the Termination of Merger with

PharmaCann, the Company is expected to receive a cultivation and manufacturing license in Hillcrest, Illinois,

and the related facility (collectively, the "Hillcrest assets"), and subsequently transferred its rights to acquire

the Hillcrest assets from PharmaCann. Refer to the “Recent Developments” section.

• Operations in the State of Arizona. Subsequent to December 28, 2019, the Company amended the secured

promissory note issued in connection with the acquisition of Kannaboost Technology Inc. and CSI Solutions

LLC (collectively referred to as "Level Up") wherein the principal amount was amended from $15.0 million

to $13.0 million and the maturity date was extended to April 8, 2020. As referred to in “Discontinued

Operations” above, management entered into plans to sell its operations in the state of Arizona. On December

26, 2019, the Company entered into a non-binding term sheet to sell its operations in the state of Arizona,

which includes a dispensary license and licenses for two vertically-integrated operations in Arizona, which

include retail locations in Scottsdale and Tempe and cultivation and production facilities in Temple and

Phoenix.

OVERALL PERFORMANCE

Factors Affecting Performance

Company management believes that the nascent cannabis industry represents an extraordinary opportunity in which

the Company’s performance and success depend on a number of factors:

• Market Expansion. The Company’s success in achieving a desirable retail footprint is attributable to its market

expansion strategy, which was a key driver of revenue growth. Going forward, the Company will exercise

discretion in focusing on investing in retail locations that can deliver near term increased earnings to the

Company.

• Retail Growth. MedMen stores are located in premium locations in markets such as New York, California,

Nevada, Illinois and Florida. As it continues to increase sales, the Company expects to leverage its retail

footprint to develop a robust distribution model.

17

• Direct-to-Consumer Channel Rollout. MedMen Delivery is available in California. The Company expects to

obtain increased traction with in-store pickup as well as its recently launched delivery service and loyalty

rewards program during calendar year 2020.

• New Cannabis Products. On October 5, 2018, MedMen launched a comprehensive suite of new cannabis

products under the brand [statemade]. The Company also recently launched MedMen Red which includes

cartridges and disposable pens. On December 5, 2019, the Company announced that MedMen Red, one of

MedMen’s in-house lines of cannabis products, was made available in Nevada. MedMen Red flower and pre-

rolls are available exclusively at MedMen’s Paradise, Downtown Las Vegas and Spring Valley locations.

Trends

MedMen is subject to various trends that could have a material impact on the Company, its financial performance and

condition, and its future outlook. A deviation from expectations for these trends could cause actual results to differ

materially from those expressed or implied in forward-looking information included in this MD&A and the

Company’s financial statements. These trends include, but are not limited to, the following:

• Liberalization of Cannabis Laws. The Company is reliant on the existing legal and regulatory administration

as to the sale and consumption of cannabis in the states in which the Company operates not being repealed or

overturned and on the current approach to enforcement of federal laws by the federal government. The

Company is also reliant on the continuation of the trend toward increased liberalization of cannabis laws

throughout the United States, including the adoption of medical cannabis regulations in states without cannabis

programs and the conversion of medical cannabis laws to recreational cannabis laws in states with medical

cannabis programs. Although the Company is focused on California, New York, Nevada, Illinois and Florida,

this trend provides MedMen with new opportunities to deploy capital and expand geographically. The

opportunity for geographic expansion is important because some jurisdictions with existing cannabis programs

limit the number of retail locations that can be owned by a single entity.

• Popular Support for Cannabis Legalization. The Company is reliant on the continuation of the trend toward

increased popular support and acceptance of cannabis legalization. This trend could change if there is new

research conducted that challenges the health benefits of cannabis or that calls into question its safety or

efficacy or significant product recalls or broad-based deleterious health effects. This trend could also be

influenced by a shift in the political climate, or by a decision of the United States government to enforce federal

laws that make cannabis illegal. Such a change in popular support could undermine the trend toward cannabis

legalization and possibly lead states with existing cannabis programs to roll them back, either of which would

negatively impact the Company’s growth plans.

• Balanced Supply and Demand in States. The Company is reliant on the maintenance of a balance between

supply and demand in the various states in which it operates cannabis retail stores. Federal law provides that

cannabis and cannabis products may not be transported across state lines in the United States. As a result, all

cannabis consumed in a state must be grown and produced in that same state. This dynamic could make it more

difficult, in the short term, to maintain a balance between supply and demand. If excess cultivation and

production capacity is created in any given state and this is not matched by increased demand in that state then

this could exert downward pressure on the retail price for products. A substantial increase in retail licenses

offered by state authorities in any given state could result in increased competition and exert downward

pressure on the retail pricing. If cultivation and production in a state fails to match demand, there could be

insufficient supply of product in a state to meet demand, causing retail revenue in that state to fall or stagnate.

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Risks and Uncertainties

The Company is subject to various risks and uncertainties that could have a material impact on its financial

performance and condition, and future outlook. Many factors could cause the Company’s actual results, performance

and achievements to differ materially from those expressed or implied by the forward-looking information and

forward-looking statements contained herein including, without limitation, the following factors which are disclosed

in greater detail in the Annual Information Form of the Company filed on November 12, 2019, short form base shelf

prospectus of the Company filed on March 26, 2019 and the press release of the Company dated December 11, 2019,

which are available at www.sedar.com under the Company’s profile, which risk factors should be reviewed in detail

by all readers. These risks and uncertainties include, but are not limited to, the following:

• Unpredictability as a result of the capital structure and concentrated voting control.

• Continued operations and development may require additional financing and as a result, additional equity and

debt securities to be issued in the future, which may dilute a shareholder’s holdings in the Company or cause

additional indebtedness to be incurred.

• Potential inability to secure adequate or reliable sources of funding required to operate or grow the business.

• The Company’s strategic plan is dependent on existing cannabis licenses and continued ability to win and

acquire new licenses to sell medical and recreational cannabis and related products. These licenses are subject

to ongoing compliance, reporting and renewal requirements.

• The Company is subject to and cannabis continues to be a controlled substance under the United States

Controlled Substances Act (the “CSA”).

• The laws, regulations and guidelines generally applicable to the cannabis industry in the United States and

internationally may change in ways currently unforeseen by the Company.

• There can be no assurance that the United States government will not choose to enforce more aggressively

laws criminalizing cannabis at the federal level.

• The Company’s assets may be subject to civil asset forfeiture as the cannabis industry remains illegal under

U.S. federal law.

• There can be no assurance that proposed dispositions will be consummated and that the requisite regulatory

approvals and third-party consents and other conditions will be satisfied on the proposed terms and schedule.

• There can be no assurance that the announcement or consummation of proposed dispositions will not have an

adverse impact on relationships, including with regulatory bodies, employees, suppliers, customers and

competitors.

• Proposed dispositions will divert management time.

• Potential inability to effectively manage growth.

• There are risks related to existing completed acquisitions and future divestitures that may result in unanticipated

liabilities.

• Future clinical research studies on the effects of cannabis may lead to conclusions that dispute or conflict with

the Company’s understanding and belief regarding the medical benefits, viability, safety, efficacy, dosing and

social acceptance of cannabis.

• There can be no assurance that current and future strategic alliances or expansions of the scope of existing

relationships will have a beneficial impact on the business, financial condition and results of operations.

• Limited operating history and risks common to early-stage enterprises.

• Existing stores and facilities are integral to the operations and any adverse changes or developments affecting

these stores and facilities may impact the business, financial condition and results of operations.

• The cannabis industry and markets are relatively new in the United States and in other jurisdictions, and this

industry and market may not continue to exist or grow as anticipated or the Company may ultimately be unable

to succeed in this industry and market.

• The Company has experienced a high degree of turnover in senior management and there is no guarantee the

Company will be able to attract and retain senior management in the future.

• There may be conflicts of interest between management and directors.

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• The Company may be subject to product liability claims.

• The products sold in the Company’s stores may be subject to recalls.

• Potential inability to attract or retain skilled labor and personnel with experience in the cannabis sector and

may be unable to attract, develop and retain additional employees required for business operations and future

developments.

• The Company, or the cannabis industry more generally, may receive unfavorable publicity or become subject

to negative consumer perception.

• Potential inability to negotiate favorable pricing for the cannabis products through the wholesale market.

• Potential inability to successfully develop new products or find a market for their sale.

• Potential inability to retain existing customers or patients as clients or acquire new customers or patients as

clients.

• Potential inability to achieve or maintain profitability and may continue to incur losses in the future.

• The Company relies on its own market research to forecast sales and market demand that may not materialize.

• Existing operations in the United States are, and any future operations or investments may be, the subject of

heightened scrutiny by regulators, stock exchanges and other authorities in Canada.

• The Company may be subject to increased compliance costs and increased limitations on its ability to conduct

public and private securities offerings as it has lost its status as a foreign private issuer under applicable United

States securities laws.

• The Company is subject to constraints on marketing cannabis products.

• Potential inability to meet the contractual requirements of existing debt obligations or obligations to other

counterparties, including suppliers.

• Potential inability to refinance, extend or repay the Company’s substantial indebtedness or inability to obtain

any refinancing or extension without significantly limiting management’s discretion in the operation of the

Company.

• The Company may be subject to increased leverage risk if faced with adverse economic factors such as

downturns in the economy or deterioration in the condition of the business.

• The Company may experience breaches of security at its facilities or in respect of electronic documents and

data storage and may face risks related to breaches of applicable privacy laws.

• The Company may be adversely affected by information technology system failures, cyber-attacks or other

information security breaches.

• If the Company is not able to comply with all safety, health and environmental regulations applicable to the

Company’s operations and industry, it may be held liable for any breaches thereof.

• The Company may become subject to fraudulent activity by employees, contractors and consultants.

• The Company is subject to existing litigation and could be subject to additional litigation in the future.

• The Company may compete for market share with other companies who may have longer operating histories

and more financial resources, manufacturing and marketing experience.

• Third parties with whom the Company does business may perceive themselves as being exposed to reputational

risk as a result of their relationship with the Company.

• Insurance premiums may not continue to be commercially justifiable and there may be coverage limitations

and other exclusions that may not be sufficient to cover potential liabilities.

• There may be a limited market for the Company’s securities.

• The Company may face risks related to the unenforceability of contracts.

• The Company may be subject to risks inherent in an agricultural business.

• Sales by existing shareholders may negatively impact market prices for the Company’s securities.

• The Company may be subject to risks related to the economy generally.

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SELECTED FINANCIAL INFORMATION

MedMen reports results of operations of its affiliates from the date that control commences, either through the

purchase of the business or control through a management agreement. The following selected financial information

includes only the results of operations after the Company established control of its affiliates. Accordingly, the

information included below may not be representative of the results of operations if such affiliates had included their

results of operations for the entire reporting period.

The following table sets forth selected consolidated financial information for the periods indicated that was derived

from the unaudited interim condensed consolidated financial statements and the respective accompanying notes

prepared in accordance with IFRS. Adjusted Net Loss from Continuing Operations (Non-IFRS), EBITDA from

Continuing Operations (Non-IFRS) and Adjusted EBITDA from Continuing Operations (Non-IFRS) exclude certain

material non-cash items and certain other adjustments that the Company believes are not reflective of ongoing

operations and performance. Adjusted Net Loss from Continuing Operations (Non-IFRS), EBITDA from Continuing

Operations (Non-IFRS), Adjusted EBITDA from Continuing Operations (Non-IFRS) and Working Capital are not

measures that are defined under IFRS. See “Non-IFRS Financial Measures” for non-IFRS reconciliations and other

non-IFRS definitions.

The selected interim consolidated financial information set forth below may not be indicative of MedMen’s future

performance:

December 28, December 29, December 28, December 29,

($ in Millions) 2019 2018 2019 2018

Revenue 44.1$ 29.4$ 83.7$ 50.9$

Gross Profit Before Fair Value Adjustments

for Biological Assets 4.5$ 13.0$ 26.8$ 24.7$

Loss from Operations (56.5)$ (60.5)$ (103.3)$ (123.7)$

Total Other Expense 12.2$ 0.6$ 38.0$ 2.4$

Net Loss and Comprehensive Loss from

Continuing Operations (74.8)$ (63.2)$ (153.4)$ (129.7)$

Net Loss and Comprehensive Loss from

Discontinued Operations (21.7)$ (1.4)$ (25.7)$ (1.4)$

Net Loss and Comprehensive Loss (96.4)$ (64.6)$ (179.1)$ (131.1)$

Net Loss and Comprehensive Loss Attributable

to Non-Controlling Interest (55.8)$ (45.9)$ (107.0)$ (99.9)$

Net Loss and Comprehensive Loss Attributable

to Shareholders of MedMen Enterprises Inc. (40.6)$ (18.7)$ (72.1)$ (31.2)$

Adjusted Net Loss from Continuing Operations (Non-IFRS) (70.8)$ (53.6)$ (125.9)$ (106.2)$

EBITDA from Continuing Operations (Non-IFRS) (39.1)$ (53.4)$ (83.0)$ (113.4)$

Adjusted EBITDA from Continuing Operations (Non-IFRS) (35.1)$ (43.8)$ (55.5)$ (89.8)$

13 Weeks Ended 26 Weeks Ended

21

Components of Results of Operations

Revenue

For the 13 and 26 weeks ended December 28, 2019, the Company derived the vast majority of its revenue from direct

sales to customers in its retail stores. Approximately 75% of revenue was generated from operations in California,

with the remaining 25% from operations in New York, Nevada, Illinois and Florida. Revenue through retail stores is

recognized upon delivery of the goods to the customer and when collection is reasonably assured, net of an estimated

allowance for sales returns.

Cost of Goods Sold and Gross Profit

Gross profit is revenue less cost of goods sold, realized fair value of inventory sold and unrealized gains and losses

from the transformation of biological assets. Cost of goods sold includes the costs directly attributable to product sales

and includes amounts paid for finished goods, such as flower, edibles and concentrates, as well as packaging and other

supplies, fees for services and processing, and also includes allocated overhead, which includes allocations of rent,

administrative salaries, utilities and related costs. Cannabis costs are affected by various state regulations that limit

the sourcing and procurement of cannabis product, which may create fluctuations in gross profit over comparative

periods as the regulatory environment changes. Gross margin measures gross profit as a percentage of revenue.

Expenses

General and administrative expenses represent costs incurred in MedMen’s corporate offices, primarily related to

personnel costs, including salaries, incentive compensation, benefits, share-based compensation and other professional

service costs, including legal and accounting. Sales and marketing expenses consist of selling costs to support

customer relationships and to deliver product to retail stores. It also includes a significant investment in marketing and

brand activities and the corporate infrastructure required to support the ongoing business.

Income Taxes

MedMen is subject to income taxes in the jurisdictions in which it operates and, consequently, income tax expense is

a function of the allocation of taxable income by jurisdiction and the various activities that impact the timing of taxable

events. As the Company operates in the legal cannabis industry, the Company is subject to the limits of Internal

Revenue Code (“IRC”) Section 280E under which the Company is only allowed to deduct expenses directly related

to sales of product. This results in permanent differences between ordinary and necessary business expenses deemed

non-allowable under IRC Section 280E and a higher effective tax rate than most industries. However, the state of

California does not conform to IRC Section 280E and, accordingly, the Company deducts all operating expenses on

its California Franchise Tax Returns.

Non-IFRS Financial Measures

In addition to providing financial measurements based on IFRS, the Company provides additional financial metrics

that are not prepared in accordance with IFRS. Management uses non-IFRS financial measures, in addition to IFRS

financial measures, to understand and compare operating results across accounting periods, for financial and

operational decision-making, for planning and forecasting purposes and to evaluate the Company’s financial

performance. These non-IFRS financial measures (collectively, the “non-IFRS financial measures”) are:

22

EBITDA from Continuing Operations Net Loss from Continuing Operations adjusted for net interest and

other financing costs, provision for income taxes, and amortization and

depreciation

Adjusted EBITDA from Continuing

Operations

EBITDA from Continuing Operations adjusted for transaction costs,

share-based compensation, and other non-cash operating costs, such as

unrealized gain or loss on fair value of biological assets, change in fair

value of derivative liabilities, and unrealized change in fair value of

investments

Adjusted Net Loss from Continuing

Operations

Net Loss from Continuing Operations adjusted for transaction costs,

share-based compensation, and other non-cash operating costs

Working Capital Current assets less current liabilities

Retail Revenue Consolidated revenue less non-retail revenue, such as cultivation and

manufacturing revenue

California Retail Revenue Retail Revenue less Retail Revenues outside of California

Retail Cost of Goods Sold Consolidated Cost of Goods Sold less Non-Retail Cost of Goods Sold

California Retail Cost of Goods Sold Retail Cost of Goods Sold less those related to Retail Cost of Goods

Sold outside of California

Four Wall Retail Gross Margin Retail Revenue less the related Retail Cost of Goods Sold

Four Wall Retail Gross Margin Rate Four Wall Retail Gross Margin divided by Retail Revenue

Four Wall Retail EBITDA Margin Four Wall Retail Gross Margin less direct store operating expenses,

including rent, payroll, security, insurance, office supplies and

payment processing fees

Four Wall Retail EBITDA Margin Rate Four Wall Retail EBITDA Margin divided by Retail Revenue

Four Wall Retail Adjusted EBITDA

Margin

Four Wall Retail EBITDA Margin less local taxes and distribution

expenses

Four Wall Retail Adjusted EBITDA

Margin Rate

Four Wall Retail Adjusted EBITDA Margin divided by Retail Revenue

Four Wall California Retail Gross

Margin

California Retail Revenue less the related California Retail Cost of

Goods Sold

Four Wall California Retail Gross

Margin Rate

Four Wall California Retail Gross Margin divided by California Retail

Revenue

Four Wall California Retail EBITDA

Margin

Four Wall California Retail Gross Margin less direct California store

operating expenses, including rent, payroll, security, insurance, office

supplies and payment processing fees

Four Wall California Retail EBITDA

Margin Rate

Four Wall California Retail EBITDA Margin divided by California

Retail Revenue

Four Wall California Retail Adjusted

EBITDA Margin

Four Wall California Retail EBITDA Margin less California local

taxes and California distribution expenses

Four Wall California Retail Adjusted

EBITDA Margin Rate

Four Wall California Retail Adjusted EBITDA Margin divided by

California Retail Revenue

Management believes that these non-IFRS financial measures assess the Company’s ongoing business in a manner

that allows for meaningful comparisons and analysis of trends in the business, as they facilitate comparing financial

results across accounting periods and to those of peer companies. Management also believes that these non-IFRS

financial measures enable investors to evaluate the Company’s operating results and future prospects in the same

manner as management. These non-IFRS financial measures may also exclude expenses and gains that may be unusual

in nature, infrequent or not reflective of the Company’s ongoing operating results.

23

As there are no standardized methods of calculating these non-IFRS financial measures, the Company’s methods may

differ from those used by others, and accordingly, the use of these measures may not be directly comparable to

similarly titled measures used by others. Accordingly, these non-IFRS financial measures are intended to provide

additional information and should not be considered in isolation or as a substitute for measures of performance

prepared in accordance with IFRS.

In particular, the Company continues to make investments in its cannabis properties and management resources to

better position the organization to achieve its strategic growth objectives which have resulted in outflows of economic

resources. Accordingly, the Company uses these metrics to measure its core financial and operating performance for

business planning purposes. In addition, the Company believes investors use both IFRS and non-IFRS measures to

assess management’s past and future decisions associated with its priorities and allocation of capital, as well as to

analyze how the business operates in, or responds to, swings in economic cycles or to other events that impact the

cannabis industry. However, these measures do not have any standardized meaning prescribed by IFRS and may not

be comparable to similar measures presented by other companies in the Company’s industry.

Non-IFRS financial measures are financial measures that are not defined under IFRS. The Company uses these non-

IFRS financial measures and believes they enhance an investors’ understanding of the Company’s financial and

operating performance from period to period. These non-IFRS financial measures exclude certain material non-cash

items and certain other adjustments the Company believes are not reflective of its ongoing operations and performance.

These financial measures are not intended to represent and should not be considered as alternatives to net income,

operating income or any other performance measures derived in accordance with IFRS as measures of operating

performance or operating cash flows or as measures of liquidity.

These non-IFRS financial measures have important limitations as analytical tools and should not be considered in

isolation or as a substitute for any standardized measure under IFRS. For example, certain of these non-IFRS financial

measures:

exclude certain tax payments that may reduce cash available to the Company;

do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may

have to be replaced in the future;

do not reflect changes in, or cash requirements for, working capital needs; and

do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on

debt.

Other companies in the cannabis industry may calculate these measures differently than the Company does, limiting

their usefulness as comparative measures.

Reconciliations of Non-IFRS Financial Measures

The table below reconciles Net Loss from Continuing Operations (IFRS) to Adjusted Net Loss from Continuing

Operations (Non-IFRS), Net Loss from Continuing Operations (IFRS) to EBITDA from Continuing Operations (Non-

IFRS) and EBITDA from Continuing Operations (Non-IFRS) to Adjusted EBITDA from Continuing Operations

(Non-IFRS) for the periods indicated.

24

Adjusted EBITDA from Continuing Operations (Non-IFRS) for the 13 and 26 weeks ended December 29, 2018 was

adjusted to conform to the current year presentation of Adjusted EBITDA from Continuing Operations (Non-IFRS)

for the 13 and 26 weeks ended December 28, 2019. Changes in fair value of biological assets and derivative liabilities

are now included in other non-cash operating costs. Under the prior year presentation, Adjusted EBITDA Loss from

Continuing Operations (Non-IFRS) was $52.0 million and $98.9 million for the 13 and 26 weeks ended December

29, 2018, respectively.

See “Key Business Metrics – Fiscal Second Quarter of 2020 Compared to Fiscal First Quarter of 2020” for

reconciliations of other non-IFRS financial measures.

December 28, December 29, December 28, December 29,

($ in Millions) 2019 2018 2019 2018

Net Loss from Continuing Operations (IFRS) (74.8)$ (63.2)$ (153.4)$ (129.7)$

Add Impact of:

Transaction Costs and Other One-Time Costs 17.8 4.2 18.8 5.7

Share-Based Compensation 2.6 11.5 9.0 22.7

Other Non-Cash Operating Income (16.4) (6.1) (0.3) (4.9)

Total Adjustments 4.0 9.6 27.5 23.5

Adjusted Net Loss from Continuing Operations (Non-IFRS) (70.8)$ (53.6)$ (125.9)$ (106.2)$

Net Loss from Continuing Operations (IFRS) (74.8)$ (63.2)$ (153.4)$ (129.7)$

Add Impact of:

Net Interest and Other Financing Costs 12.0 2.6 23.2 5.0

Provision for Income Taxes 6.1 2.2 12.1 3.6

Amortization and Depreciation 17.6 5.0 35.1 7.7

Total Adjustments 35.7 9.8 70.4 16.3

EBITDA from Continuing Operations (Non-IFRS) (39.1)$ (53.4)$ (83.0)$ (113.4)$

EBITDA from Continuing Operations (Non-IFRS) (39.1)$ (53.4)$ (83.0)$ (113.4)$

Add Impact of:

Transaction Costs and Other One-Time Costs 17.8 4.2 18.8 5.7

Share-Based Compensation 2.6 11.5 9.0 22.7

Other Non-Cash Operating Income (16.4) (6.1) (0.3) (4.8)

Total Adjustments 4.0 9.6 27.5 23.6

Adjusted EBITDA from Continuing Operations (Non-IFRS) (35.1)$ (43.8)$ (55.5)$ (89.8)$

13 Weeks Ended 26 Weeks Ended

25

DISCUSSION OF OPERATIONS

13 Weeks Ended December 28, 2019 Compared to 13 Weeks Ended December 29, 2018

December 28, December 29,

($ in Millions) 2019 2018 $ Change % Change

Revenue 44.0$ 29.4$ 14.6$ 50%

Cost of Goods Sold 39.5 16.4 23.1 141%

Gross Profit Before Fair Value Adjustments 4.5 13.0 (8.5) (65%)

Realized Fair Value of Inventory Sold 5.3 (0.2) 5.5 (2,750%)

Unrealized Gain on Changes in Fair Value

of Biological Assets 3.0 2.9 0.1 3%

Gross Profit 12.8 15.7 (2.9) (18%)

Expenses:

General and Administrative 52.5 64.1 (11.6) (18%)

Sales and Marketing 3.6 8.6 (5.0) (58%)

Depreciation and Amortization 13.1 3.4 9.7 285%

Total Expenses 69.2 76.1 (6.9) (9%)

Loss from Operations (56.4) (60.4) 4.0 (7%)

Other Expense (Income):

Interest Expense 12.2 2.3 9.9 430%

Interest Income (0.3) (0.3) - -

Amortization of Debt Discount and

Loan Origination Fees 4.3 2.0 2.3 115%

Change in Fair Value of Derivatives (0.4) (5.4) 5.0 (93%)

Unrealized Gain on Changes in Fair Value

of Investments (5.0) (1.2) (3.8) 317%

Unrealized Gain on Changes in Fair Value

of Contingent Consideration (4.6) - (4.6) -

Other Expense 6.0 3.2 2.8 88%

Total Other Expense 12.2 0.6 11.6 1,933%

Loss from Continuing Operations Before Provision

for Income Taxes (68.6) (61.0) (7.6) 12%

Provision for Income Taxes 6.1 2.2 3.9 177%

Net Loss and Comprehensive Loss from

Continuing Operations (74.7) (63.2) (11.5) 18%

Net Loss from Discontinued Operations, Net of Taxes (21.7) (1.4) (20.3) 1,450%

Net Loss and Comprehensive Loss (96.4) (64.6) (31.8) 49%

Net Loss and Comprehensive Loss Attributable to

Non-Controlling Interest (55.8) (45.9) (9.9) 22%

Net Loss and Comprehensive Loss Attributable to

Shareholders of MedMen Enterprises Inc. (40.6)$ (18.7)$ (21.9)$ 117%

Adjusted Net Loss from Continuing Operations (Non-IFRS) (70.8)$ (53.6)$ (17.2)$ 32%

EBITDA from Continuing Operations (Non-IFRS) (39.1)$ (53.4)$ 14.3$ (27%)

Adjusted EBITDA from Continuing Operations (Non-IFRS) (35.1)$ (43.8)$ 8.7$ (20%)

13 Weeks Ended

26

Revenue

Revenue for the 13 weeks ended December 28, 2019 was $44.0 million, an increase of $14.6 million, or 50%,

compared to revenue of $29.4 million for the 13 weeks ended December 29, 2018. The significant increase in revenue

was driven by the acquisitions of dispensaries and the operationalization of related licenses in several states during

2018 through fiscal second quarter of 2020. More specifically, for the 13 weeks ended December 28, 2019, MedMen

had 32 active retail locations in the states of California, New York, Nevada, Arizona, Illinois and Florida, of which

three were located within the state of Arizona and were classified as discontinued operations, compared to sixteen

active retail locations for the same period in the prior year, of which one was located within the state of Arizona and

was classified as discontinued operations. As the Company continues to build dispensaries and operationalize existing

licenses, revenue is expected to continue increasing in the coming periods. However, expectations of increased

revenues through acquisitions are subject to risks as further noted herein and in the Annual Information Form.

Cost of Goods Sold and Gross Profit

Cost of goods sold for the 13 weeks ended December 28, 2019 was $39.5 million, an increase of $23.1 million, or

141%, compared with $16.4 million of cost of goods sold for the 13 weeks ended December 29, 2018. Gross profit

before fair value adjustments for realized fair value of inventory sold and unrealized gain on changes in fair value of

biological assets for the 13 weeks ended December 28, 2019 was $4.5 million, representing a gross margin of 10%,

compared with gross profit of $13.0 million, representing a gross margin of 44%, for the 13 weeks ended December

29, 2018. During the 13 weeks ended December 28, 2019, the Company recognized a non-recurring, one-time

cumulative expense of $9.5 million related to a reclassification between cost of goods sold and the unrealized gain on

changes in fair value of biological assets, of which approximately $7.8 million and $1.7 million was related to the

fiscal first quarter of 2020 and the fiscal second quarter of 2020, respectively. The decrease in gross margin is primarily

driven by the acquisitions of dispensaries and cultivation and manufacturing facilities and the operationalization of

related licenses in several states during 2018 through fiscal year 2020, resulting in increased product, labor and

overhead costs associated with the Company’s retail, cultivation and manufacturing expansion.

For the 13 weeks ended December 28, 2019, the Company had 32 active retail locations in the states of California,

New York, Nevada, Arizona, Illinois and Florida, of which three were located within the state of Arizona and were

classified as discontinued operations, compared to sixteen active retail locations for the same period in the prior year,

of which one was located within the state of Arizona and was classified as discontinued operations. The addition of

new operating retail locations since the comparative period resulted in a significant increase in revenue, and thus

resulted in a corresponding increase in cost of goods sold.

Notwithstanding the foregoing, the decrease in gross profit was also attributable to cost of goods sold increasing at a

higher rate than the increase in revenues, primarily due to the increase in the number of cultivation and production

facilities operated by the Company resulting in higher production costs. For the 13 weeks ended December 28, 2019,

MedMen operated six cultivation and production facilities in the states of Nevada, California, New York, Florida and

Arizona, of which two were related to the operations within the state of Arizona that were classified as discontinued

operations, compared to five facilities in the states of Nevada, New York Florida and Arizona for the same period in

the prior year, of which one was related to the operations within the state of Arizona that was classified as discontinued

operations. MedMen expects costs of goods sold to increase at a slower rate than the increase in revenue in the coming

periods as the Company divests certain operations and licenses in non-core markets and executes a cost rationalization

plan to reduce retail-level operating expenses.

Total Expenses

Total expenses, including general and administrative, sales and marketing and depreciation and amortization, for the

13 weeks ended December 28, 2019 were $69.2 million, a decrease of $6.9 million, or 9%, compared to total expenses

of $76.1 million for the 13 weeks ended December 29, 2018, which represents 157% of revenue for the 13 weeks

ended December 28, 2019, compared to 259% of revenue for the 13 weeks ended December 29, 2018. The decrease

in total expenses was attributable to the factors described below.

27

General and administrative expenses for the 13 weeks ended December 28, 2019 and December 29, 2018 were $52.5

million and $64.1 million, respectively, a decrease of $11.6 million, or 18%. General and administrative expenses

have decreased primarily due to the Company’s efforts to optimize Corporate SG&A, as defined in the “Key Business

Metrics” section above and as initially announced on November 15, 2019. Key drivers of the decrease in Corporate

SG&A expenses include general corporate cost savings, strategic headcount reductions across various departments,

and elimination of non-core functions and overhead in various departments.

Sales and marketing expenses for the 13 weeks ended December 28, 2019 and December 29, 2018 were $3.6 million

and $8.6 million, respectively, a decrease of $5.0 million, or 58%. The decrease is primarily attributed to the reduction

in marketing and sales related spend due to implementation of the Company’s cost-cutting strategy.

Depreciation and amortization for the 13 weeks ended December 28, 2019 and December 29, 2018 was $13.1 million

and $3.4 million, respectively, an increase of $9.7 million, or 285%. The increase is attributed to the growth of the

Company’s operations through acquisitions, as well as significant property and equipment acquired in recent periods

as compared to the same period in the prior year. In addition, the increase in depreciation and amortization was also

due to depreciation of $7.2 million recorded during the 13 weeks ended December 28, 2019 for right-of-use assets as

a result of the Company’s adoption of IFRS 16 on June 30, 2019.

Total Other Expense

Total other expense for the 13 weeks ended December 28, 2019 was $12.2 million, an increase of $11.6 million

compared to total other expense of $555,000 for the 13 weeks ended December 29, 2018. The increase in total other

expense was primarily due to increased interest expense as an effect of the Company’s adoption of IFRS 16 on June

30, 2019, resulting in interest expense related to capital leases of $8.6 million during the fiscal second quarter of 2020,

as well as the Company’s higher debt balance compared to the same period in the prior year. Additionally, the increase

in total other expense was also attributed to restructuring expenses of $5.3 million during the 13 weeks ended

December 28, 2019 and a decrease of $5.0 million in unrealized gain on changes in fair value of derivatives, offset by

an increase of $4.6 million in unrealized gain on changes in fair value of contingent consideration and an increase of

$3.8 million in unrealized gain on changes in fair value of investments.

Provision for Income Taxes

Provision for income taxes for the 13 weeks ended December 28, 2019 was $6.1 million compared to the provision

for income taxes of $2.2 million for the 13 weeks ended December 29, 2018, primarily due to the Company’s increased

revenue and operations compared to the same period in the prior year.

Net Loss and Comprehensive Loss from Continuing Operations

Net loss from continuing operations for the 13 weeks ended December 28, 2019 was $74.7 million, an increase of

$11.5 million, or 18%, compared to a net loss of $63.2 million for the 13 weeks ended December 29, 2018. The

increase in net loss from continuing operations was mainly attributable to an increase in interest expense due to the

adoption of IFRS 16 as noted above and an increase in depreciation and amortization due to acquisitions of assets

related to the Company’s retail, cultivation and manufacturing expansion compared to the same period in the prior

year. However, the increases in interest expense and depreciation and amortization were partially offset by a decrease

in general and administrative expenses compared to the 13 weeks ended December 29, 2018 as part of the Company’s

efforts to optimize Corporate SG&A. Net loss attributable to non-controlling interest for the 13 weeks ended December

28, 2019 was $55.8 million, resulting in net loss of $40.6 million attributable to the shareholders of MedMen

Enterprises Inc. compared to $18.7 million for the 13 weeks ended December 29, 2018.

28

26 Weeks Ended December 28, 2019 Compared to 26 Weeks Ended December 29, 2018

December 28, December 29,

($ in Millions) 2019 2018 $ Change % Change

Revenue 83.7$ 50.9$ 32.8$ 64%

Cost of Goods Sold 56.9 26.2 30.7 117%

Gross Profit Before Fair Value Adjustments 26.8 24.7 2.1 9%

Realized Fair Value of Inventory Sold (5.5) (2.2) (3.3) 150%

Unrealized Gain on Changes in Fair Value of

Biological Assets 8.5 2.9 5.6 193%

Gross Profit 29.8 25.4 4.4 17%

Expenses:

General and Administrative 99.8 129.9 (30.1) (23%)

Sales and Marketing 9.4 13.4 (4.0) (30%)

Depreciation and Amortization 23.9 5.8 18.1 312%

Total Expenses 133.1 149.1 (16.0) (11%)

Loss from Operations (103.3) (123.7) 20.4 (16%)

Other Expense (Income):

Interest Expense 23.9 4.4 19.5 443%

Interest Income (0.6) (0.3) (0.3) 100%

Amortization of Debt Discount

and Loan Origination Fees 7.2 2.4 4.8 200%

Change in Fair Value of Derivatives (0.5) (6.2) 5.7 (92%)

Unrealized Gain on Changes in Fair Value

of Investments (16.5) (1.2) (15.3) 1,275%

Unrealized Gain on Changes in Fair Value

of Contingent Consideration (1.9) - (1.9) (100%)

Other Expense 26.4 3.3 23.1 700%

Total Other Expense 38.0 2.4 35.6 1,483%

Loss from Continuing Operations Before Provision

for Income Taxes (141.3) (126.1) (15.2) 12%

Provision for Income Taxes 12.1 3.6 8.5 236%

Net Loss and Comprehensive Loss from

Continuing Operations (153.4) (129.7) (23.7) 18%

Net Loss from Discontinued Operations, Net of Taxes (25.7) (1.4) (24.3) 1,736%

Net Loss and Comprehensive Loss (179.1) (131.1) (48.0) 37%

Net Loss and Comprehensive Loss Attributable to

Non-Controlling Interest (107.0) (99.9) (7.1) 7%

Net Loss and Comprehensive Loss Attributable to

Shareholders of MedMen Enterprises Inc. (72.1)$ (31.2)$ (40.9)$ 131%

Adjusted Net Loss from Continuing Operations (Non-IFRS) (125.9)$ (106.2)$ (19.7)$ 19%

EBITDA from Continuing Operations (Non-IFRS) (83.0)$ (113.4)$ 30.4$ (27%)

Adjusted EBITDA from Continuing Operations (Non-IFRS) (55.5)$ (89.8)$ 34.3$ (38%)

26 Weeks Ended

29

Revenue

Revenue for the 26 weeks ended December 28, 2019 was $83.7 million, an increase of $32.8 million, or 64%,

compared to revenue of $50.9 million for the 26 weeks ended December 29, 2018. The increase in revenue was driven

by the acquisitions of dispensaries in several states during 2018 through fiscal second quarter of 2020. More

specifically, for the 26 weeks ended December 28, 2019, MedMen had 32 active retail locations in the states of

California, New York, Nevada, Arizona, Illinois and Florida, of which three were located within the state of Arizona

and were classified as discontinued operations, compared to sixteen active retail locations for the same period in the

prior year, of which one was located within the state of Arizona and was classified as discontinued operations. The

addition of the new operating retail locations in fiscal year 2020 resulted in a significant increase in revenues. As the

Company continues to acquire and build dispensaries and operationalize existing licenses, revenue is expected to

continue increasing in the coming periods. However, expectations of increased revenues through acquisitions are

subject to risks as further noted herein and in the Annual Information Form.

Cost of Goods Sold and Gross Profit

Cost of goods sold for the 26 weeks ended December 28, 2019 was $56.9 million, an increase of $30.7 million, or

117%, compared with $26.2 million of cost of goods sold for the 26 weeks ended December 29, 2018. Gross profit

before fair value adjustments for realized fair value of inventory sold and unrealized gain on changes in fair value of

biological assets for the 26 weeks ended December 28, 2019 was $26.8 million, representing a gross margin of 32%,

compared with gross profit of $24.7 million, representing a gross margin of 49%, for the 26 weeks ended December

29, 2018. During the 26 weeks ended December 28, 2019, the Company recognized a non-recurring, one-time

cumulative expense of $9.5 million related to a reclassification between cost of goods sold and the unrealized gain on

changes in fair value of biological assets. The decrease in gross margin is primarily driven by the acquisitions of

dispensaries and cultivation and manufacturing facilities and the operationalization of related licenses in several states

during 2018 through fiscal second quarter of 2020, resulting in increased product, labor and overhead costs associated

with the Company’s retail, cultivation and manufacturing expansion.

For the 26 weeks ended December 28, 2019, the Company had 32 active retail locations in the states of California,

New York, Nevada, Arizona, Illinois and Florida, of which three were located within the state of Arizona and were

classified as discontinued operations, compared to sixteen active retail locations for the same period in the prior year,

of which one was located within the state of Arizona and was classified as discontinued operations. The addition of

new operating retail locations since the comparative period resulted in a significant increase in revenue, and thus

resulted in a corresponding increase in cost of goods sold.

The decrease in gross profit was also attributable to cost of goods sold increasing at a higher rate than the increase in

revenues, primarily due to the increase in the number of cultivation and production facilities operated by the Company

resulting in higher production costs. For the 26 weeks ended December 28, 2019, the Company operated six cultivation

and production facilities in the states of Nevada, California, New York, Florida and Arizona, of which two were related

to the operations within the state of Arizona that were classified as discontinued operations, compared to five facilities

in the states of Nevada, New York, Florida and Arizona for the same period in the prior year, of which one was related

to the operations within the state of Arizona that was classified as discontinued operations. MedMen expects costs of

goods sold to increase at a slower rate than the increase in revenue in the coming periods as the Company divests

certain operations and licenses in non-core markets and executes a cost rationalization plan to reduce retail-level

operating expenses.

Total Expenses

Total expenses, including general and administrative, sales and marketing and depreciation and amortization, for the

26 weeks ended December 28, 2019 were $133.1 million, a decrease of $16.0 million, or 11%, compared to total

expenses of $149.1 million for the 26 weeks ended December 29, 2018, which represents 159% of revenue for the 26

weeks ended December 28, 2019, compared to 293% of revenue for the 26 weeks ended December 29, 2018. The

decrease in total expenses was attributable to the factors described below.

30

General and administrative expenses for the 26 weeks ended December 28, 2019 and December 29, 2018 were $99.8

million and $129.9 million, respectively, a decrease of $30.1 million, or 23%. General and administrative expenses

have decrease primarily due to the Company’s efforts to optimize Corporate SG&A, as defined in the “Key Business

Metrics” section above and as initially announced on November 15, 2019. Key drivers of the decrease in Corporate

SG&A expenses include general corporate cost savings, strategic headcount reductions across various departments,

and elimination of non-core functions and overhead in various departments. In addition, rent expense is no longer

recorded in general and administrative expenses due to the adoption of IFRS 16 on June 30, 2019, resulting in a

corresponding increase in depreciation and interest expense compared to the 26 weeks ended December 29, 2018.

Sales and marketing expenses for the 26 weeks ended December 28, 2019 and December 29, 2018 were $9.4 million

and $13.4 million, respectively, a decrease of $4.0 million, or 30%. The decrease in sales and marketing expenses is

primarily attributed to the reduction in marketing and sales related spend compared to the same period in the prior

year as part of the Company’s corporate cost reduction initiatives.

Depreciation and amortization for the 26 weeks ended December 28, 2019 and December 29, 2018 was $23.9 million

and $5.8 million, respectively, an increase of $18.1 million, or 312%. The increase is attributed to the growth of the

Company’s operations through acquisitions, as well as significant property and equipment acquired in recent periods

as compared to the same period in the prior year. In addition, the increase in depreciation and amortization was also

due to depreciation expense of $10.4 million recorded during the 26 weeks ended December 28, 2019 for right-of-use

assets as a result of the Company’s adoption of IFRS 16 on June 30, 2019.

Total Other Expense

Total other expense for the 26 weeks ended December 28, 2019 was $38.0 million, an increase of $35.6 million

compared to total other expense of $2.4 million for the 26 weeks ended December 29, 2018. The increase in total other

expense was primarily due to a loss on the extinguishment of debt of $20.9 million related to the amendment to the

Gotham Green credit facility and a revaluation of debt as required under IFRS, and increased interest expense as an

effect of the Company’s adoption of IFRS 16 on June 30, 2019, resulting in interest expense related to capital leases

of $15.9 million during the 26 weeks ended December 28, 2019 compared to nil in the comparative period, as well as

the Company’s higher debt balance compared to the same period in the prior year. Additionally, the increase in total

other expense was also attributed to an increase of $4.8 million in amortization of debt discount and loan origination

fees, a decrease of $5.7 million in unrealized gain on changes in fair value of derivatives, offset by an increase of

$15.3 million in unrealized gain on changes in fair value of investments during the 26 weeks ended December 28,

2019 as compared with the same period in the prior year.

Provision for Income Taxes

The provision for income taxes for the 26 weeks ended December 28, 2019 was $12.1 million compared to the

provision for income taxes of $3.6 million for the 26 weeks ended December 29, 2018, primarily due to the Company’s

increased revenue and operations compared to the same period in the prior year.

Net Loss and Comprehensive Loss from Continuing Operations

Net loss from continuing operations for the 26 weeks ended December 28, 2019 was $153.4 million, an increase of

$23.7 million, or 18%, compared to a net loss of $129.7 million for the 26 weeks ended December 29, 2018. The

increase in net loss was primarily attributable to an increase in depreciation and amortization due the Company’s

expansion, an increase in interest expense given the Company’s higher debt balance and the adoption of IFRS 16, and

a loss on the extinguishment of debt related to the amendment and a revaluation of debt during the 26 weeks ended

December 28, 2019, which was partially offset by an increase in unrealized gain on changes in fair value of

investments and a decrease in general and administrative expenses compared to the same period in the prior year as

part of the Company’s efforts to optimize Corporate SG&A. Net loss attributable to non-controlling interest for the

26 weeks ended December 28, 2019 was $107.0 million, resulting in net loss of $72.1 million attributable to the

shareholders of MedMen Enterprises Inc. compared to $31.2 million for the 26 weeks ended December 29, 2018.

31

SUMMARY OF QUARTERLY RESULTS

The following table presents selected financial information for the eight most recently prepared quarters, excluding

the Company’s operations in the state of Arizona that were classified as discontinued operations for all periods

presented:

Revenue increased quarter over quarter through the 13 weeks ended December 28, 2019, primarily due to the number

of active retail locations acquired and operated. For the 13 weeks ended December 28, 2019, the Company experienced

growth in sales from retail locations that had previously not operated in the comparative prior period.

For each quarter presented, there were no other significant factors, economically or industry-wide relating to pricing,

competition, or buying patterns that contributed to the noted significant variances.

While revenue and the number of active retail locations has increased, changes in net loss quarter over quarter are

primarily due to non-cash considerations related to compensation and debt and equity transactions. Net loss from

continuing operations for the quarter ended June 30, 2018 increased significantly from the prior fiscal quarters as a

result of a one-time recognition of equity compensation to management. Net loss from continuing operations for the

13 weeks ended June 29, 2019 increased compared to the preceding fiscal quarters as a result of restructuring costs of

$7.6 million and provision for income taxes arising from the Company’s acquisitions in prior periods. While net loss

from continuing operations for the 13 weeks ended September 28, 2019 included a loss on extinguishment of debt of

$20.9 million, net loss from continuing operations for the 13 weeks ended December 28, 2019 decreased compared to

the preceding few quarters primarily due to an overall reduction in marketing and technology spend as a result of the

Company’s efforts to optimize Corporate SG&A.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Previous Financings

During the 52 weeks ended June 29, 2019, the Company raised gross proceeds of approximately $331.1 million from

issuances of debt and equity instruments, including sales of member units and private placements. Of the capital raised

during the 52 weeks ended June 29, 2019, approximately $271.3 million was used for the following: debt payments

($54.5 million), acquisitions of businesses ($26.7 million), asset acquisitions ($19.8 million), cultivation and retail

property and equipment purchases and buildouts ($125.0 million) and general working capital needs to fund operations

($45.4 million).

Period Total Revenue Net Loss

Active Retail

Locations

($ in Millions)

13 Weeks Ended December 28, 2019 44.1$ $ (74.8) 29

13 Weeks Ended September 28, 2019 39.6$ $ (78.6) 24

13 Weeks Ended June 29, 2019 35.2$ $ (82.2) 20

13 Weeks Ended March 30, 2019 31.5$ $ (62.5) 18

13 Weeks Ended December 29, 2018 (1)

29.4$ $ (63.2) 15

Quarter Ended September 30, 2018 21.5$ $ (66.5) 14

Quarter Ended June 30, 2018 20.6$ $ (80.3) 11

Quarter Ended March 31, 2018 14.4$ $ (16.8) 7

_____________________

(1) See “Change in Fiscal Year-End”.

32

During the 26 weeks ended December 28, 2019, the Company raised gross proceeds of approximately $92.3 million

through the issuance of debt and equity instruments. The funds received during the 26 week period and from the

previous year’s financing were used primarily for operations ($52.4 million for the 26 weeks ended December 28,

2019), cultivation and retail property and equipment purchases of $48.0 million, lease liability payments of $11.8

million, and principal repayments of debt and interest of $17.6 million.

Financial Condition

The following table summarizes certain aspects of the Company’s financial condition as of December 28, 2019 and

June 29, 2019:

As of December 28, 2019, the Company had $26.0 million of cash and cash equivalents and $37.7 million of working

capital deficit, compared to $33.8 million of cash and cash equivalents and $0.8 million of working capital as of June

29, 2019. Reductions in cash and cash equivalents were primarily due to the Company’s investments in its retail

expansion in which MedMen increased the number of active retail locations from twenty operating retail stores as of

June 29, 2019 to 29 operating retail stores as of December 28, 2019, excluding retail stores in the state of Arizona that

were classified as discontinued operations. The decrease in cash and cash equivalents was also associated with

significant payments on lease liability, notes payable and costs associated with the issuances of debt. The foregoing

uses of cash were partially offset by cash generated from the sale of property and significant debt and equity financing

during the 26 weeks ended December 28, 2019.

As part of its plan to achieve positive EBITDA, as initially announced on November 15, 2019, the Company intends

to limit significant cash outlays over the next twelve months while maintaining an overall focus on core markets. First,

the Company identified markets in which management has deemed non-core to MedMen’s retail footprint given the

current market conditions and regulatory environment. Management’s initiative is then threefold: 1) renegotiate cash

payments for previously announced transactions, 2) slowdown in mergers and acquisitions and 3) reduce capital

expenditures. The Company has indefinitely postponed buildouts and retail store expansions totaling approximately

$55.0 million. Refer to the “Recent Developments” section above.

The $38.5 million decrease in working capital was primarily related to an increase of $34.1 million in accounts payable

and accrued liabilities, an increase of $15.4 million in liabilities held for sale related to discontinued operations, an

increase of $13.4 million in lease liabilities due to the Company’s adoption of IFRS 16 on June 30, 2019, an increase

of $9.7 million in income taxes payable as a result of increased revenue and operations, and an increase of $10.0

million in other current liabilities, offset by a decrease of $8.0 million in derivative liabilities. The net increase in

current liabilities was offset by an increase of $55.3 million in assets held for sale related to the Company’s divestiture

of non-core assets and an increase of $5.0 million in inventory as a result of the Company’s retail expansion with the

addition of nine operating retail stores since June 29, 2019, which were offset by a decrease of $7.8 million in cash

and cash equivalents, a decrease of $4.9 million in derivative assets, and a decrease of $7.5 million in prepaid expenses

primarily related to prepaid advertising as a result of the reduction in marketing spend and prepaid rent as a result of

the adoption of IFRS 16 on June 30, 2019.

December 28, June 29,

($ in Millions) 2019 2019 $ Change % Change

Cash and Cash Equivalents 26.0$ 33.8$ (7.8)$ (23%)

Restricted Cash 0.1$ 0.1$ -$ -

Total Current Assets 151.2$ 115.8$ 35.4$ 31%

Total Assets 844.0$ 634.6$ 209.4$ 33%

Total Current Liabilities 188.7$ 114.9$ 73.8$ 64%

Notes Payable, Net of Current Portion 212.0$ 167.7$ 44.3$ 26%

Total Liabilities 726.3$ 433.8$ 292.5$ 67%

Total Shareholders' Equity 117.8$ 200.8$ (83.0)$ (41%)

Working Capital (Deficit) (37.7)$ 0.8$ (38.5)$ (4,813%)

33

The Company’s working capital will be significantly impacted by continued growth in retail operations,

operationalizing existing licenses, and the success of the Company’s cost-cutting measures. The ability to fund

working capital needs will also be dependent on the Company’s ability to raise additional debt and equity financing.

Cash Flows

Cash Flow from Operating Activities

Net cash used in operating activities was $52.4 million for the 26 weeks ended December 28, 2019, a decrease of

$72.6 million, or 58%, compared to $125.0 million for the 26 weeks ended December 29, 2018. The decrease in net

cash used in operating activities was primarily due to the Company’s focused efforts on the optimization of Corporate

SG&A during the 26 weeks ended December 28, 2019.

Cash Flow from Investing Activities

Net cash used in investing activities was $15.6 million for the 26 weeks ended December 28, 2019, a decrease of $51.6

million, or 77%, compared to $67.2 million for the 26 weeks ended December 29, 2018. The decrease in net cash used

in investing activities was primarily due to a decrease of $29.7 million in acquisition of businesses, a decrease of $6.8

million in purchases of property and equipment and a decrease of $8.3 million in purchase of investments as the

Company shifts its strategic plan to focus on limiting cash outlays. Net cash was positively impacted by an increase

of $5.0 million in proceeds from the sale of assets held for sale and an increase of $12.5 million in cash proceeds from

the sale of investments during the 26 weeks ended December 28, 2019. The decreases in purchases and acquisitions

were offset by a decrease in proceeds from the sale of property of $3.7 million and a decrease in additions to restricted

cash of $3.1 million compared to the same period in the prior year.

Cash Flow from Financing Activities

Net cash provided by financing activities was $61.4 million for the 26 weeks ended December 28, 2019, a decrease

of $129.8 million, or 68%, compared to $191.2 million for the 26 weeks ended December 29, 2018. The decrease in

net cash provided by financing activities was primarily due to a decrease of $62.7 million in the issuance of equity

instruments for cash, a decrease of $8.5 million in the proceeds from the exercise of warrants for shares of the

Company, and a decrease of $56.2 million in proceeds from the issuance of notes payable. The decreases in proceeds

of financing activities were offset by an increase of $11.8 million in lease liability payments as a result of the

Company’s adoption of IFRS 16 on June 30, 2019 and a decrease of $11.3 million in principal repayments on notes

payable during the 26 weeks ended December 28, 2019 compared to the same period in the prior year.

December 28, December 29,

($ in Millions) 2019 2018 $ Change % Change

Net Cash Used in Operating Activities (52.4)$ (125.0)$ 72.6$ (58%)

Net Cash Used in Investing Activities (15.6) (67.2) 51.6 (77%)

Net Cash Provided by Financing Activities 61.4 191.2 (129.8) (68%)

Net Decrease in Cash and Cash Equivalents (6.6) (1.0) (5.6) 560%

Cash Included in Assets Held for Sale (1)

(1.2) - (1.2) (100%)

Cash and Cash Equivalents, Beginning of Period 33.8 79.2 (45.4) (57%)

Cash and Cash Equivalents, End of Period 26.0$ 78.2$ (52.2)$ (67% )

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

(1) See “Discontinued Operations”.

26 Weeks Ended

34

Liquidity and Capital Resources

As of December 28, 2019, cash generated from ongoing operations was not sufficient to fund operations and, in

particular, to fund the Company’s growth strategy in the short-term or long-term. The Company anticipates a need to

raise additional funds from debt and equity financing. As of December 28, 2019, the aggregate amount available to

be borrowed under the senior secured convertible credit facility with Gotham Green Partners is $115.0 million. The

remaining amount of proceeds available from the sale of Class B Subordinate Voting Shares under the ATM Program

is C$24,454,350 as of December 28, 2019. The primary need for liquidity is to fund working capital requirements of

the business, including operationalizing existing licenses, capital expenditures, debt service and acquisitions. The

primary source of liquidity has primarily been private and/or public financing and, to a lesser extent, by cash generated

from sales. The ability to fund operations, to make planned capital expenditures, to execute on the growth strategy, to

make scheduled debt and rent payments and to repay or refinance indebtedness depends on the Company’s future

operating performance and cash flows, which are subject to prevailing economic conditions and financial, business

and other factors, some of which are beyond its control.

For the 26 weeks ended December 28, 2019, the Company’s monthly burn rate, which was calculated as cash spent

per month in operating activities, was approximately $8.7 million, representing an improvement from the $19.7

million burn rate as of June 29, 2019. At its current operating level, the Company may not have sufficient funds

generated from ongoing operations to cover short-term and long-term operational needs and capital expenditure plans

related to operationalizing existing licenses. As of December 28, 2019, the Company had $26.0 million of cash and

cash equivalents and $37.7 million of working capital deficit, compared to $33.8 million of cash and cash equivalents

and $0.8 million of working capital as of June 29, 2019. The decrease of $38.5 million in working capital is primarily

due to an increase in current liabilities offset by an increase in current assets as of December 28, 2019 compared to

June 29, 2019, as discussed in the “Financial Condition” section above.

Contractual Obligations

As of December 28, 2019 and June 29, 2019, and in the normal course of business, the Company has the following

obligations to make future payments, representing contracts and other commitments that are known and committed.

The Company had the following contractual obligations as of December 28, 2019:

Lease liabilities as of December 28, 2019 increased by $333.1 million compared to June 29, 2019 as a result of the

Company’s adoption of IFRS 16 on June 30, 2019, wherein lessees are required to recognize assets and liabilities for

all leases with a term exceeding twelve months, unless the underlying asset is insignificant. The lease liability

represents the Company’s obligation to make lease payments and is measured at the discounted present value of the

remaining fixed lease payments. The majority of the Company’s property leases were impacted by the adoption of

IFRS 16, which resulted in higher current and non-current liabilities related to the concurrent recognition of lease

liabilities. The recent adoption of the accounting pronouncement does not impact the Company’s current or future

cash flows.

During the 26 weeks ended December 28, 2019, amounts outstanding under the GGP Facility increased by $51.2

million due to the funding of Tranche 2 and Tranche 3 on July 12, 2019 and November 27, 2019, respectively, and

the issuance of the Amendment Fee Notes on October 29, 2019.

< 1 Year 1 to 3 Years 4 to 5 Years > 5 Years TOTAL

Accounts Payable and

Accrued Liabilities 83,928,235$ -$ -$ -$ 83,928,235$

Other Liabilities 20,532,350$ 2,016,675$ 2,016,675$ 6,142,587$ 30,708,286$

Derivative Liabilities 1,313,781$ -$ -$ -$ 1,313,781$

Lease Liabilities 32,969,868$ 93,473,525$ 90,901,355$ 345,869,389$ 563,214,137$

Notes Payable 20,269,053$ 68,961,867$ 819,144$ 770,420$ 90,820,484$

Due to Related Party 4,922,974$ -$ -$ -$ 4,922,974$

Senior Secured Convertible

Credit Facility -$ 141,438,823$ -$ -$ 141,438,823$

35

The Company had the following contractual obligations as of June 29, 2019:

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no material undisclosed off-balance sheet arrangements that have, or are reasonably likely to have,

a current or future effect on its results of operations, financial condition, revenues or expenses, liquidity, capital

expenditures or capital resources that are material to investors.

TRANSACTIONS BETWEEN RELATED PARTIES

All related party balances due from or due to the Company as of December 28, 2019 and June 29, 2019 did not have

any formal contractual agreements requiring payment terms or interest.

As of December 28, 2019 and June 29, 2019, amounts due from related parties were as follows:

< 1 Year 1 to 3 Years 4 to 5 Years > 5 Years TOTAL

Accounts Payable and

Accrued Liabilities 49,794,041$ -$ -$ -$ 49,794,041$

Other Liabilities 10,550,240$ 22,214,365$ 2,016,675$ 6,646,754$ 41,428,034$

Derivative Liabilities 9,343,485$ -$ -$ -$ 9,343,485$

Lease Liabilities 11,873,173$ 37,799,755$ 27,127,623$ 153,333,160$ 230,133,711$

Notes Payable 20,229,641$ 75,727,536$ 819,144$ 846,069$ 97,622,390$

Due to Related Party 5,640,817$ -$ -$ -$ 5,640,817$

Senior Secured Convertible

Credit Facility -$ 90,270,837$ -$ -$ 90,270,837$

December 28, June 29,

Name and Relationship to Company Transaction 2019 2019

1,820,904$ 1,820,904$

1,228,259 1,228,259

- 1,153,200

Other 591,122 719,092

Total Amounts Due from Related Parties 3,640,285$ 4,921,455$

MMOF GP II, LLC (“Fund LP II”), an entity which Mr.

Adam Bierman, Mr. Andrew Modlin and Mr. Christopher

Ganan each holds 33.3% indirect voting interest. The

shareholders each hold 27.1% of indirect equity interest in

Fund LP II, the General Partner of Fund II, which both

hold equity interests in a subsidiary of the Company.

Management Fees

MedMen Opportunity Fund GP, LLC (“Fund LP”), an

entity which Mr. Adam Bierman, Mr. Andrew Modlin and

Mr. Christopher Ganan each holds 33.3% indirect voting

interest. The shareholders each hold 24.2% of indirect

equity interest in Fund LP, the General Partner of Fund I,

which both hold equity interests in a subsidiary of the

Company.

Management Fees

MedMen Canada Inc., a 50/50 joint venture partnership

between the Company and Cronos Group Inc.

Advance

36

As of December 28, 2019 and June 29, 2019, amounts due to related parties were as follows:

On July 10, 2019, the Company announced an equity commitment from Gotham Green Partners, with participation

from Wicklow Capital, in the amount of $30.0 million. As a result, the Company issued 14,634,147 Subordinate

Voting Shares to the investors.

On December 10, 2019, the Company executed a term sheet for a non-brokered private placement wherein Wicklow

Capital participated in the offering. As of December 28, 2019, the Company issued 23,720,929 Subordinate Voting

Shares for gross proceeds of $10.2 million in connection with the Equity Placement.

During the 13 weeks ended December 28, 2019, the Company determined Gotham Green Partners to be a related

party. Transactions with GGP are described in “Strategic Partnership with Gotham Green Partners” above and “Note

17 – Senior Secured Convertible Credit Facility” of the unaudited interim condensed consolidated financial statements

for the 13 and 26 weeks ended December 28, 2019. As of December 28, 2019, the Company has drawn down $100.0

million from Tranche 1, $25.0 million from Tranche 2 and $10.0 million from Tranche 3 of the GGP Facility.

On October 17, 2019, the Company entered into an agreement to sell a portion of its interest in Old Pal LLC to GGP

and a third party. The interests sold consist of 86.80 Class B Units, or 6.9% of the outstanding units, resulting in an

aggregate sale price of approximately $5.0 million.

PROPOSED TRANSACTIONS

Key Developments Subsequent to December 28, 2019

Descriptions of significant events subsequent to December 28, 2019 are more fully described in the section “Recent

Developments” above. Also refer to “Note 26 – Subsequent Events” of the unaudited interim condensed consolidated

financial statements for the 13 and 26 weeks ended December 28, 2019.

December 28, June 29,

Name and Relationship to Company Transaction 2019 2019

(1,093,896)$ (1,093,896)$

(2,862,647) (2,862,647)

Other (966,431) (1,684,274)

Total Amounts Due to Related Parties (4,922,974)$ (5,640,817)$

Fund LP II, an entity which Mr. Adam Bierman, Mr.

Andrew Modlin and Mr. Christopher Ganan each holds

33.3% indirect voting interest. The shareholders each hold

27.1% of indirect equity interest in Fund LP II, the General

Partner of Fund II, which both hold equity interests in a

subsidiary of the Company.

Working Capital,

Construction and

Tenant Improvements,

Lease Deposits and

Cash Used for

Acquisitions

Fund LP, an entity which Mr. Adam Bierman, Mr. Andrew

Modlin and Mr. Christopher Ganan each holds 33.3%

indirect voting interest. The shareholders each hold 24.2%

of indirect equity interest in Fund LP, the General Partner

of Fund I, which both hold equity interests in a subsidiary

of the Company.

Working Capital,

Management Fees

and Cash Used for

Acquisitions

37

CRITICAL ACCOUNTING ESTIMATES

The Company makes judgments, estimates and assumptions about the future that affect the policies and reported

amounts of assets and liabilities, and revenues and expenses. Actual results may differ from these estimates. The

estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the

revision and future periods if the review affects both current and future periods.

The preparation of the Company’s interim consolidated financial statements in conformity with IFRS requires

management to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that

are not readily apparent from other sources. The estimates and associated assumptions are based on historical

experience and other factors that are considered to be relevant.

There have been no changes in critical judgments, estimates and assumptions that have a significant effect on the

amounts recognized in the interim consolidated financial statements other than the estimates described below. For

more information on the Company’s critical accounting estimates, refer to the annual MD&A for the 13 and 52 weeks

ended June 29, 2019.

Right-of-Use Assets and Lease Liabilities

Right-of-use assets are measured at cost, which is calculated as the amount of the initial measurement of lease liability

plus any lease payments made at or before the commencement date, any initial direct costs and related restoration

costs. The right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term or estimates of

economic life. The Company’s lease liability is recognized net of lease incentives receivable. The lease payments are

discounted using the interest rate implicit in the lease or, if that rate cannot be determined, the lessee’s incremental

borrowing rate. The period over which the lease payments are discounted is the expected lease term, including renewal

and termination options that the Company is reasonably certain to exercise. Refer to “Note 2(h) – Summary of

Significant Accounting Policies” of the unaudited interim condensed consolidated financial statements for the 13 and

26 weeks ended December 28, 2019.

Assets Held for Sale and Discontinued Operations

Assets held for sale are measured at the lower of its carrying amount or fair value less cost to sell (“FVLCTS”) unless

the asset held for sale meets the exceptions as denoted by IFRS 5. FVLCTS is the amount obtainable from the sale of

the asset in an arm’s length transaction, less the costs of disposal. A component of an entity is identified as operations

and cash flows that can be clearly distinguished, operationally and financially, from the rest of the entity. A

discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale.

38

FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS

Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, due

from related party, investments, derivative assets, accounts payable and accrued liabilities, acquisition consideration

related liabilities, notes payable, due to related party, derivative liabilities and the GGP Facility. The carrying values

of these financial instruments approximate their fair values as of December 28, 2019 and June 29, 2019.

Financial instruments recorded at fair value are classified using a fair value hierarchy that reflects the significance of

the inputs to fair value measurements. The three levels of hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or

indirectly; and

Level 3 – Inputs for the asset or liability that are not based on observable market data.

During the 26 weeks ended December 28, 2019, the fair value of certain investments was determined using Level 2

inputs. The fair value of these investments was previously determined using Level 3 inputs. Refer to “Note 6 – Other

Current Assets” in the unaudited interim condensed consolidated financial statements for the 13 and 26 weeks ended

December 28, 2019.

Financial Risk Management

The Company is exposed to varying degrees and a variety of financial instrument related risks. The Board mitigates

these risks by assessing, monitoring and approving the Company’s risk management processes:

• Credit Risk

Credit risk is the risk of a potential loss to the Company if a customer or third party to a financial instrument

fails to meet its contractual obligations. The maximum credit exposure at December 28, 2019 is the carrying

values of cash and cash equivalents, restricted cash, accounts receivable, and due from related party. The

Company does not have significant credit risk with respect to its customers. All cash and cash equivalents are

placed with major U.S. financial institutions.

The Company provides credit to its customers in the normal course of business and has established credit

evaluation and monitoring processes to mitigate credit risk but has limited risk as the majority of its sales are

transacted with cash.

• Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with

financial liabilities. The Company manages liquidity risk through the management of its capital structure. The

Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to settle

obligations and liabilities when due. As of December 28, 2019, cash generated from ongoing operations was

not sufficient to fund operations and growth strategy as discussed above in “Financial Condition, Liquidity

and Capital Resources”.

39

• Market Risk

(i) Currency Risk

The operating results and financial position of the Company are reported in U.S. dollars. Some of the

Company’s financial transactions are denominated in currencies other than the U.S. dollar. The results

of the Company’s operations are subject to currency transaction and translation risks.

The Company’s main risk is associated with fluctuations in Canadian dollars. The Company holds cash

in U.S. dollars, investments denominated in U.S. dollars, debt denominated in U.S. dollars and equity

denominated in U.S. and Canadian dollars. Such assets and liabilities denominated in currencies other

than the U.S. dollar are translated based on the Company’s foreign currency translation policy.

As of December 28, 2019 and June 29, 2019, the Company had no hedging agreements in place with

respect to foreign exchange rates. The Company has not entered into any agreements or purchased any

instruments to hedge possible currency risks at this time.

(ii) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in market interest rates. Cash and cash equivalents bear interest at market rates. The

Company’s financial liabilities have fixed rates of interest and therefore expose the Company to a

limited interest rate fair value risk.

(iii) Price Risk

Price risk is the risk of variability in fair value due to movements in equity or market prices. The

Company’s investments are susceptible to price risk arising from uncertainties about their future

outlook, future values and the impact of market conditions. The fair value of investments held in

privately-held entities are based on a market approach, which uses prices and other relevant information

generated by market transactions involving identical or comparable assets or liabilities.

40

Summary of Outstanding Share Data

The Company had the following securities issued and outstanding and reserved for issuance as of February 17, 2020:

In December 2018 and January 2019, MMMG, Fund I and Fund II each negotiated and entered into separate lock-up

agreements with MedMen Corp in respect of the MedMen Corp Redeemable Shares held by such entities (the

“MedMen Corp Redeemable Shares”), which MedMen Corp Redeemable Shares are redeemable or exchangeable

in accordance with their terms for Subordinate Voting Shares. MMMG, Fund I and Fund II held approximately 179.0

million MedMen Corp Redeemable Shares, 94.0 million MedMen Corp Redeemable Shares and 60.0 million MedMen

Corp Redeemable Shares, respectively, as of the execution of such lock-up agreements. Such lock-up agreements

provide that all of the MedMen Corp Redeemable Shares held by MMMG and approximately 105.0 million of the

total number of MedMen Corp Redeemable Shares held by Fund I and Fund II will not be permitted to be sold,

transferred or otherwise disposed of by such shareholders of MedMen Corp. until November 25, 2019, at which time,

the restrictions on resale pursuant to such agreements are to be immediately lifted as to one-twelfth of the locked-up

shares and thereafter in increments over an eleven-month period as to the remaining locked-up shares. In the event

that MMMG, Fund I or Fund II distribute their MedMen Corp Redeemable Shares to their respective members or

partners, they are required to cause such MedMen Corp Redeemable Shares to remain subject to the same restrictions

on resale. See “Risk Factors – Risks Associated with the Securities of the Company – A Significant Portion of MedMen

Corp.’s Outstanding Securities May be Redeemed in the Near Future” in the Company’s Annual Information Form

filed on November 12, 2019.

Securities

Number of

Shares

Issued and Outstanding:

Subordinate Voting Shares 318,427,362

Super Voting Shares 815,295

Additional Subordinate Voting Shares Reserved for Issuance : (1)

MedMen Enterprises Inc.:

Stock Options 17,201,510

Warrants (2)

43,085,961

Restricted Share Units 2,887,412

Convertible Notes Payable 78,238,331

MM Enterprises USA, LLC:

LTIP Units 26,386,726

Redeemable Units 725,016

MM CAN USA, Inc.:

Redeemable Shares 298,692,890

Warrants (2) 40,455,729

Total Additional Subordinate Voting Shares Reserved for Issuance 507,673,575

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

(1)

(2)

Subordinate Voting Shares reserved for issuance pursuant to redemption rights attached to

certain outstanding but unlisted shares and common units of MM CAN USA, Inc. and MM

Enterprises USA, LLC, which are subsidiaries of MedMen Enterprises Inc. and in connection with

certain outstanding convertible or exchangeable securities of such subsidiaries.

Warrants included above have been grouped together and have varying issuance dates,

expiration dates, exercise prices and other terms and conditions.

41

UNITED STATES REGULATORY ENVIRONMENT

Federal Regulatory Environment

The federal government of the United States regulates controlled substances through the CSA, which places controlled

substances on one of five schedules. Currently, marijuana is classified as a Schedule I controlled substance. A

Schedule I controlled substance means the Drug Enforcement Agency considers it to have a high potential for abuse,

no accepted medical treatment, and a lack of accepted safety for the use of it even under medical supervision. Overall,

the United States federal government has specifically reserved the right to enforce federal law in regards to the sale

and disbursement of medical or adult-use marijuana even if such sale and disbursement is sanctioned by state law.

Accordingly, there are a number of significant risks associated with the business of the Company and unless

and until the United States Congress amends the CSA with respect to medical and/or adult-use cannabis (and

as to the timing or scope of any such potential amendments there can be no assurance), there is a significant

risk that federal authorities may enforce current federal law, and the business of the Company may be deemed

to be producing, cultivating, extracting, or dispensing cannabis or aiding or abetting or otherwise engaging in

a conspiracy to commit such acts in violation of federal law in the United States.

As of December 28, 2019, $844,012,021 of the Company’s assets and $83,735,878 of the Company’s revenues (for

the 26 weeks ended December 28, 2019) are exposed to U.S. marijuana-related activities. In this respect, all of the

Company’s assets and operations are currently related to U.S. marijuana-related activities.

The following table provides a list of the licenses granted to and disclosed as applied for by, and licenses that are

subject to pending acquisitions by the Company.

Entity Address Jurisdiction License TypeExpiry Date (if applicable)

(MM/DD/YYYY)License Number(s)

State Adult-Use and Medicinal Retailer 07/23/2020 C10-0000499-LIC

City Adult Use Retail 12/31/2020002053218-0001-8: Fund/Class

J020

City Medical Retail 12/31/20200002086145-0001-8:

Fund/Class J010

City NOTICE OF ELIGIBILITY N/A LA-C-18-000454-APP

State Adult use/Medical Distribution 07/02/2020 C11-0000635-LIC

State Adult-Use and Medicinal Retailer 07/15/2020 C10-0000426-LIC

City Adult Use Retail - City of Los Angeles Tax

Registration 12/31/2020

0002053218-0001-8:

Fund/Class J020

City Medical Retail 12/31/20200002053218-0001-8 Fund

Class J010

State Adult Use and Medicinal Distributor 06/24/2020 C11-0000490-LIC

State Adult use/Medical Manufacturing Type 7 05/10/2020 CDPH-10003152

State Cultivation 09/13/2020 CAL19-0004050

CityCannabis Regulatory Permit - Cultivation,

Distribution, and Manufacturing04/02/2020 2017-00000396

City CUP for Cultivation/Distribution/Manufacturing No expiration CUP 14-16

State Adult-Use and Medicinal Retailer 07/14/2020 C10-0000421-LIC

City TUP (TEMP CITY APPROVAL) 03/31/2020 17-0013

City West Hollywood Medical Marijuana Retail Business

License12/31/2020 MMC-0004536

State Adult-Use and Medicinal Retailer 07/23/2020 C10-0000498-LIC

City Adult Use Retail 12/31/20200002260907-0001-2

Fund/Class J020

City Medical Retail 12/31/2020 0002260907-0001-2

State Adult-Use and Medicinal Retailer 07/07/2020 C10-0000385-LIC

City Adult-Use and Medicinal Retailer 08/21/2020 EPD 19-006

City CUP for Retail 02/22/2021 CUP-18-001

State Adult-Use and Medicinal Retailer 07/04/2020 C10-0000379-LIC

City Medical Marijuana Consumer Cooperative Permit 04/17/2020 Form DS-191

City CUP 06/18/2023 CUP 1865509

Sure Felt, LLC10715 Sorrento Valley Rd.,

San Diego, CA 92121

Nature's Cure, Inc.8740 S Sepulveda,

Los Angeles, CA 90045

Rochambeau, Inc.3996 San Pablo Avenue Suites A, B, C,

D; Emeryville, CA 94608

Desert Hot Springs Green Horizons,

Inc.

13300 Little Morongo Road,

Desert Hot Springs, CA 92240

Farmacy Collective8208 Santa Monica Blvd,

Santa Monica, CA 90046

Advanced Patients' Collective

735 S. Broadway,

Los Angeles, CA 90014

2430 Porter St.,

Los Angeles, CA 90021

Cyon Corporation, Inc.110 S Robertson Blvd,

Los Angeles, CA 90048

42

Entity Address Jurisdiction License TypeExpiry Date (if applicable)

(MM/DD/YYYY)License Number(s)

City CUP 06/25/20201291580

PTS# 369478

City Medical Marijuana Consumer Cooperative Permit 05/23/2020 Form DS-191

State Adult-Use and Medicinal Retailer 07/04/2020 C10-0000378-LIC

State Adult-Use and Medicinal Retailer 06/11/2020 C10-0000177-LIC

City Adult-Use Retail 12/31/20200002181643-0001-9:

Fund/Class J020

City Medical Retail 12/31/20200002181643-0001-9:

Fund/Class J010

State Adult-Use and Medicinal Retailer 07/15/2020 C10-0000442-LIC

City Regulatory Safety Permit 01/13/2021 2018-16

State Adult-Use and Medicinal Retailer 06/11/2020 C10-0000178-LIC

City Adult Use Retail 12/31/20200002245715-0001-4

Fund/Class J020

City Medical Retail 12/31/20200002245715-0001-4

Fund/Class J010

8724 Bradley Avenue

Los Angeles, CA 91352State Medicinal-Small Indoor Cultivation 09/16/2020 CCL18-0000179

State Adult use/Medical Microbusiness 07/04/2020 C12-0000144-LIC

City

City of San Jose – Medical Cannabis Cultivation,

Medical Cannabis Distribution, Medical Cannabis

Manufacturing, Medical Cannabis Retail, Non-

Medical Cannabis Cultivation, Non-Medical

Cannabis Distribution, Non-Medical Cannabis

Manufacturing, Non-Medical Cannabis Retail

12/14/2020 101-568997

City Business License 06/30/2020 9992017926

State Adult-Use and Medicinal Retailer 07/15/2020 C10-0000425-LIC

CityBusiness License - Dispensary with Delivery - Adult

Use08/30/2023 MJ21908299

CityBusiness License - Dispensary with Delivery -

Medical01/04/2023 MJ21908296

State Adult-Use and Medicinal Retailer 07/15/2020 C10-0000438-LIC

City Business License - Adult Use 11/13/2024 MJ21900879

City Business License - Medical 11/13/2024 MJ21701426

State Adult-Use and Medicinal Retailer 07/02/2020 C10-0000364-LIC

City Conditional Use Permit - City of Grover Beach 3/5/2020(1) 17-39

State Adult-Use and Medicinal Retailer 06/24/2020 C10-0000273-LIC

State Adult-Use and Medicinal Retailer N/A

City Adult-Use and Medicinal Retailer N/A

State Adult-Use and Medicinal Retailer N/A

City Adult-Use and Medicinal Retailer N/A

State Adult-Use and Medicinal Retailer N/A

City Adult-Use and Medicinal Retailer N/A

State Adult-Use and Medicinal Retailer N/A C10-19-0000288-APP

City Adult-Use and Medicinal Retailer N/A Pending Local Approval

MedMen Boston, LLC120 Brookline Avenue,

Boston, MA 02215State and City Adult-Use and Medicinal Retailer N/A

Pending Local and State

Approval

MME Newton Retail, LLC232 Boylston Street,

Newton, MA 02459State and City Adult-Use and Medicinal Retailer N/A

Pending Local and State

Approval

MME 1001 North Retail LLC1001 W. North Ave,

Chicago, IL 60642State and City Adult-Use and Medicinal Retailer N/A

Pending Local and State

Approval

CountyMarijuana Master License Retail Store/Medical

Dispensary12/31/2020 2000169.MMR-301

State Retail Marijuana Store 06/30/2020

 Certificate:

04045523128584413069 Code:

RD078

State Medical Marijuana Dispensary 06/30/2020

Certificate:

3465297098641153293 MME

Code: D078

MMOF Vegas Retail Inc4503 Paradise Rd St. 210 A-B,

Las Vegas, NV 8916

MME Pasadena Retail, LLC536 S. Fair Oaks,

Pasadena, CA 91105

Pending Local and State

Approval

12071 Wilshire Retail LLC12071 Wilshire Blvd,

Los Angeles, CA 90025

MME Sutter Retail Inc.532 Sutter Street,

San Francisco, CA 94102

Pending Local and State

Approval

MME Union Retail, LLC1861 Union St,

San Francisco, CA 94123

Pending Local and State

Approval

Ryan Cameron Rayburn

Collective, Inc.

2115 E 10th St,

Long Beach, CA 90804

Milkman, LLC923 Huber Street,

Grover Beach, California 93433

PHSL, LLC840 Broadway Ave, Suite B-4

Seaside, CA 93955

MattnJeremy, Inc.2767 E. Broadway

Long Beach, CA 90803

Venice Caregiver Foundation, Inc.

1310 Abbot Kinney Blvd,

Venice CA 90291

Viktoriya's Medical Supplies, LLC1075 10th St N.

San Jose, CA 95112

The Compassion Network 410 Lincoln Blvd.,

Venice, CA 90291

The Source Santa Ana 2141 S Wright Street,

Santa Ana CA 92705

MMOF San Diego Retail, Inc.5125 Convoy St., #211

San Diego, CA 92111

43

Entity Address Jurisdiction License TypeExpiry Date (if applicable)

(MM/DD/YYYY)License Number(s)

City Medical Retail Business License 07/01/2020 License #: M66-00014

City Recreational Retail Business License 07/01/2020 License #: M66-00015

State Retail Marijuana Store 06/30/2020

Certificate:

67501179020484699802 Code:

RD178

State Medical Marijuana Dispensary 06/30/2020

Certificate:

51798010886861416556 Code:

D178

CityMarijuana Master License Retail Store/Medical

Dispensary12/31/2020 2000104.MMR-301

State Retail Marijuana Store 06/30/2020

Certificate:

10756476132829656560 Code:

RD092

State Medical Marijuana Dispensary 06/30/2020

Certificate:

55740439531874846857 Code:

D092

State Marijuana Cultivation Facility 07/31/2020

Certificate:

07912568590104527553 Code:

RC025

StateMedical Marijuana Cultivation Registration

Certificate06/30/2020

Certificate:

17870088520850390544 Code:

C025

County Marijuana Cultivation Facility 04/01/2020 W000009ME-LIC

State Marijuana Product Manufacturing Facility 07/31/2020

Certificate:

28332017443877189253 Code:

RP016

StateMedical Marijuana Production Registration

Certificate06/30/2020

Certificate:

42811321585035807243 Code:

P016

County Marijuana Product Manufacturing Facility 04/01/2020 W000005ME-LIC

StateApproval to Operate - Dispensary Cultivation

Site/Reg Cert #08/07/2020 00000008DCJJ00257791

City CUP N/A 9-UP-2015

State Tranaction Privilege Tax License 12/31/2020 21112181

StateApproval to Operate - Dispensary, Cultivation

(offsite)/Reg Cert #08/07/2020 00000072DCMU00762354

State TPT License Renewal 12/31/2020 20996502

City CUP 10/01/2020 8-UP-2012#2

State Approval to Operate -Cultivation (offsite) 08/07/2020 00000072DCMU00762354

State Tranaction Privilege Tax License 12/31/2020 20996502

State Approval to Operate - Dispensary 10/05/2021 00000118DCKD00426097

State Cultivation 10/05/2021 00000118DCKD00426097

State Tranaction Privilege Tax License 12/31/2020 21204217

1113 Herkimer Road,

Utica, NY 13501State Manufacturing License 07/31/2021 MM0501M

2001 Marcus Avenue,

Lake Success, NY 11042State Dispensing License 07/31/2021 MM0502D

433 Fifth Avenue,

New York, NY 10116State Dispensing License 07/31/2021 MM0503D

1304 Buckley Road,

Syracuse, NY 13212State Dispensing License 07/31/2021 MM0504D

6850 Main Street,

Buffalo, NY 14221State Dispensing License 07/31/2021 MM0505D

Kannaboost Technology, Inc.2424 W. University Drive,

Tempe, AZ 85281

MedMen NY, Inc.

CSI Solutions LLC14980 N 78th Way, Suite 204,

Scottsdale, AZ 85260

EBA Holdings, Inc.

8729 E Manzanita Dr.,

Scottsdale, AZ 85258

2832 N. Omaha,

Mesa, AZ 85125

MMOF Vegas Retail 2, Inc.6332 S Rainbow Blvd #105,

Las Vegas, NV 89118

MMNV2 Holdings I, LLC12000 Truckee Canyon Court,

Sparks NV 89434

MMOF Fremont Retail, Inc.823 S 3rd Street,

Las Vegas, NV 89101

44

Disclosure that a license has been granted to or applied for by the Company does not imply that all required regulatory

steps have been satisfied to operate a cannabis facility under that license, as licensing commonly requires multiple

levels of approval at the state and local level, as well as securing compliant real estate, and licenses listed as having

been granted are often provisional in nature.

The Company’s operations are in compliance with applicable state laws, regulations and licensing requirements.

Additionally, the Company uses the same proprietary, best-practices policies and procedures in its managed

dispensaries as in its owned dispensaries in order to ensure systematic operations and, as such, to the Company’s

knowledge, the dispensaries that the Company manages are in compliance with applicable state laws, regulations and

licensing requirements.

Nonetheless, for the reasons described above and the risks further described under the “Risk and Uncertainties” section

herein and in the Company’s Annual Information Form, there are significant risks associated with the business of the

Company. Readers are strongly encouraged to carefully read all the risk factors contained herein and in the Company’s

Annual Information Form.

The following sections describe the legal and regulatory landscape in respect of the states in which the Company

currently operates and as such in which it is currently contemplated that the Company will be operating upon

completion of announced transactions.

Entity Address Jurisdiction License TypeExpiry Date (if applicable)

(MM/DD/YYYY)License Number(s)

106 E. College Ave, Ste. 810

Tallahassee, FL 32301State Certificate of Nursery Registration 08/03/2020 48021776

Eustis

25540 County Road 44A

Eustis, Florida 32736

State Processing Authorization 02/28/2020 N/A

Fort Lauderdale

2949 North Federal Highway

Fort Lauderdale, Florida 33306

State Dispensing Authorization 02/28/2020 N/A

Jacksonville Beach

308 3rd Street South

Jacksonville Beach, Florida 32250

State Dispensing Authorization 02/28/2020 N/A

Key West

130 Duval Street

Key West Florida, 33040

State Dispensing Authorization 02/28/2020 N/A

Miami Beach

550 Collins Avenue

Miami Beach, Florida 33139

State Dispensing Authorization 02/28/2020 N/A

Orlando - International Drive

6600 International Drive

Orlando, Florida 32819

State Dispensing Authorization 02/28/2020 N/A

Orlando - University Boulevard

11551 University Blvd. Suite #2

Orlando, Florida 32817

State Dispensing Authorization 02/28/2020 N/A

Pensacola

5048 Bayou Blvd.

Pensacola, Florida 32503

State Dispensing Authorization 02/28/2020 N/A

Sarasota

1410 Main Street

Sarasota, Florida 34236

State Dispensing Authorization 02/28/2020 N/A

St. Petersburg

326 5th Avenue North

St. Petersburg, Florida 33701

State Dispensing Authorization 02/28/2020 N/A

Tallahassee

1126 Thomasville Road

Tallahassee, Florida 32303

State Dispensing Authorization 02/28/2020 N/A

West Palm Beach

537-539 Clematis Street

West Palm Beach, Florida 33401

State Dispensing Authorization 02/28/2020 N/A

16280 E Twombly Rd,

Hillcrest, IL 61068State

Medical Cannabis Cultivation Center, Operating

Permit

03/2020

Renewed for 2020-2021#1503060628

16280 E Twombly Rd,

Hillcrest, IL 61068State Early Approval Adult Use Cultivation Center 03/31/2021 #1503060628

State Medical Dispensing License 08/22/2020 DISP.000041

State Adult Use License 03/31/2021 AUDO.000033

State Adult Use License 03/31/2021 AUDO.000020

State Medical Dispensing License 11/09/2020 DISP.000009

PharmaCann Virginia LLC3 Industry Way

Staunton, VA 24401State Dispensary/Cultivation/Processing TBD 0202

MME Florida, LLC(2)

Notes:

(1) The noted conditional use permit for Grover Beach will be extended when construction of the retail store commences, which the Company expects to start by March 2020.

(2) MME Florida, LLC is licensed for up to 35 retail stores.

PharmaCann, LLC

Future Transactions Holdings, LLC1132 Lake Street,

Oak Park, Il 60301

MME Evanston Retail LLC1804 Maple Ave.,

Evanston, IL 60201

45

While the Company’s compliance controls have been developed to mitigate the risk of any material violations of a

license arising, there is no assurance that the Company’s licenses will be renewed in the future in a timely manner.

Any unexpected delays or costs associated with the licensing renewal process could impede the ongoing or planned

operations of the Company and have a material adverse effect on the Company’s business, financial condition, results

of operations or prospects.

California

California Regulatory Landscape

In 1996, California was the first state to legalize medical marijuana through Proposition 215, the Compassionate Use

Act of 1996 (“CUA”). This legalized the use, possession and cultivation of medical marijuana by patients with a

physician recommendation for treatment of cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis,

migraine, or any other illness for which marijuana provides relief.

In 2003, Senate Bill 420 was signed into law establishing an optional identification card system for medical marijuana

patients.

In September 2015, the California legislature passed three bills collectively known as the “Medical Cannabis Regulation

and Safety Act” (“MCRSA”). The MCRSA established a licensing and regulatory framework for medical marijuana

businesses in California. The system created multiple license types for dispensaries, infused products manufacturers,

cultivation facilities, testing laboratories, transportation companies and distributors. Edible infused product

manufacturers would require either volatile solvent or non-volatile solvent manufacturing licenses depending on their

specific extraction methodology. Multiple agencies would oversee different aspects of the program and businesses

would require a state license and local approval to operate. However, in November 2016, voters in California

overwhelmingly passed Proposition 64, the “Adult Use of Marijuana Act” (“AUMA”) creating an adult-use marijuana

program for adult-use 21 years of age or older. AUMA had some conflicting provisions with MCRSA, so in June

2017, the California State Legislature passed Senate Bill No. 94, known as Medicinal and Adult-Use Cannabis

Regulation and Safety Act (“MAUCRSA”), which amalgamates MCRSA and AUMA to provide a set of regulations

to govern medical and adult-use licensing regime for cannabis businesses in the state of California. The four agencies

that regulate marijuana at the state level are the California Department of Consumer Affairs’ Bureau of Cannabis

Control (“BCC”), California Department of Food and Agriculture (“CDFA”), California Department of Public Health

(“CDPH”), and California Department of Tax and Fee Administration (“CDTFA”).

In order to legally operate a medical or adult-use cannabis business in California, the operator must have both a local

and state license. This requires license holders to operate in cities with marijuana licensing programs. Therefore, cities

in California are allowed to determine the number of licenses they will issue to marijuana operators or can choose to

outright ban marijuana.

MAUCRSA went into effect on January 1, 2018 and final regulations, replacing emergency regulations, were issued

on January 15, 2019. The Company began receiving its marijuana medical and adult-use licenses at the beginning of

2018 and was one of the first businesses to begin selling adult-use marijuana products. The Company was also the

first business to receive approval to dispense adult-use marijuana in the City of Los Angeles on January 20, 2018. The

Company currently owns three (the maximum allowed) of the 183 permitted dispensaries in the City of Los Angeles.

The Company only operates in Californian cities with clearly defined marijuana programs.

The CDTFA is responsible for determining the tax mark-up rate on cannabis every six months. Cultivation tax rates

are also examined by the CDTFA on an annual basis. On November 21, 2019, the CDTFA announced cannabis mark-

up and cultivation tax rate changes. Effective January 1, 2020, the cannabis mark-up rate is 80% and cultivation tax

rates have been increased to represent inflationary adjustments of between 4.3% and 4.6%. The tax on cannabis flower

per dry weight per ounce increased from $9.25 to $9.65. Marijuana leaves per dry weight per ounce increased from

$2.75 and $2.87, and fresh cannabis plants per ounce increased from $1.29 to $1.35. The rates apply to cannabis that

a cultivator sells or transfers to a manufacturer or a distributor.

46

Licenses

The Company is licensed to operate as a Medical and Adult-Use Retailer, Cultivator, Manufacturer and Distributor

under applicable California and local jurisdictional law. The Company’s licenses permit it to possess, cultivate,

distribute, dispense and sell medical and adult-use cannabis in the state of California pursuant to the terms of the

various licenses issued by the BCC under the provision of the MAUCRSA and California Assembly Bill No. 133.

The licenses are independently issued for each approved activity for use at the Company’s facilities in California.

California state and local licenses are renewed annually. Each year, licensees are required to submit a renewal

application per guidelines published by BCC, CDFA and CDPH. While renewals are annual, there is no ultimate

expiry after which no renewals are permitted. Additionally, in respect of the renewal process, provided that the

requisite renewal fees are paid, the renewal application is submitted in a timely manner, and there are no material

violations noted against the applicable license, the Company would expect to receive the applicable renewed license

in the ordinary course of business.

Regulations

In the state of California, only cannabis that is grown in the state can be sold in the state. Although California is not a

vertically-integrated system, the Company has the capabilities to cultivate, harvest, process and sell/dispense/deliver

adult-use and medical cannabis and cannabis products. The state also allows the Company to make wholesale purchase

of cannabis from, or a distribution of cannabis and cannabis product to, another licensed entity within the state.

Reporting Requirements

The state of California has selected Franwell Inc.’s METRC solution (“METRC”) as the state’s track-and-trace

(“T&T”) system used to track commercial cannabis activity and movement across the distribution chain (“seed-to-

sale”). The METRC system is currently in use only by licensees who have obtained a provisional or annual license.

The system allows for other third-party system integration via application programming interface (“API”).

Nevada

Nevada Regulatory Landscape

Medical marijuana use was legalized in Nevada by a ballot initiative in 2000. In November 2016, voters in Nevada

passed an adult-use marijuana measure to allow for the sale of recreational marijuana in the state. The first dispensaries

to sell adult-use marijuana began sales in July 2017. The Nevada Department of Taxation (“DOT”) is the regulatory

agency overseeing the medical and adult use cannabis programs. Similar to California, cities and counties in Nevada

are allowed to determine the number of local marijuana licenses they will issue.

The Company only operates in Nevada cities or counties with clearly defined marijuana programs. Currently the

Company is located in the City of Las Vegas, Clark County and Washoe County jurisdictions.

Licenses

Licenses are renewed annually and there is no ultimate expiry after which no renewals are permitted. Additionally, in

respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted

in a timely manner along with the necessary supporting documents, and regulatory requirements are met, the licensee

would expect to receive the applicable renewed license in the ordinary course of business.

47

Regulations

In the state of Nevada, only cannabis that is grown/produced in the state by a licensed establishment may be sold in

the state. Although Nevada is not a vertically-integrated system, the Company is vertically-integrated and has the

capabilities to cultivate, harvest, process and sell/dispense/deliver adult-use and medical cannabis and cannabis

products. The state also allows the Company to make wholesale purchase of cannabis from another licensed entity

within the state.

Reporting Requirements

The state of Nevada uses METRC as the state’s computerized T&T system used to track commercial cannabis activity

and seed-to-sale. Individual licensees whether directly or through third-party integration systems are required to push

data to the state to meet all reporting requirements. The Company’s seed-to-sale system in the state captures the

required data points for cultivation, manufacturing and retail as required in Nevada Revised Statutes section 453A.

Florida

Florida Regulatory Landscape

In June 2014, the Florida Legislature and Governor enacted the Compassionate Medical Cannabis Act (SB1030) (the

“CMCA”) to provide a comprehensive, safe and effective medical marijuana program to meet the needs of Florida

residents. The Florida State Department of Health’s Office of Medical Marijuana Use (the “OMMU”) is the regulatory

agency overseeing the medical marijuana program.

Licenses

Florida state licenses are issued unnumbered and are renewed biennially. Licensees are required to submit a renewal

application and fees per guidelines published by OMMU. While renewals are biennial, there is no ultimate expiry after

which no renewals are permitted. Additionally, in respect of the renewal process, provided that the requisite renewal

fees are paid, the renewal application is submitted in a timely manner, and regulatory requirements are met, the

Company would expect to receive the applicable renewed license in the ordinary course of business.

Regulations

In the state of Florida, only cannabis that is grown and manufactured in the state can be sold in the state. Florida is a

vertically-integrated system, providing a single license holder the ability to cultivate, harvest, process, transport, sell

and dispense cannabis products. Delivery is allowed from dispensaries to patients, however the delivery must be pre-

approved by the OMMU.

Reporting Requirements

The OMMU has selected BioTrack as the state mandated seed-to-sale system. Although there are no periodic reporting

requirements to the State, full seed-to-sale tracking is required by all licensees and is periodically audited by the

OMMU. The Company’s cultivation and manufacturing operations are tracked by NAV software that is inputted into

the State’s BioTrack software. The Company’s retail operations are tracked by MedMen 2.0 point-of-sale software

and MedMen 2.0 point-of-sale software pulls data from the NAV software.

48

Arizona

Arizona Regulatory Landscape

The Arizona Medical Marijuana Program (the “AZDHS Program”) is governed by Title 9; Chapter 17 Department

of Health Services Medical Marijuana Program (the “AZDHS Rules”) and A.R.S. § 36-2801 et seq., as amended from

time to time (the “Arizona Act”) (the AZDHS Rules and the Arizona Act collectively referred to herein as the

“AMMA”). The Arizona Act, which was approved by the Arizona voters in 2010 provides the legal requirements and

restrictions in conjunction with the applicable rules, guidelines and requirements, promulgated by the Arizona

Department of Health Services (“AZDHS”). The AZDHS Program provides for a limited number of Medical

Marijuana Dispensary Registration Certificates (each, an “Arizona License”). The program currently allows 131

Arizona Licenses and does not require full vertical integration, resulting in a robust wholesale market. A variety of

product types are allowed in the state including medical marijuana and manufactured and derivative products which

contain medical marijuana.

Licenses

Arizona state licenses are renewed annually, with all license renewals switching to a two-year renewal cycle at the

end of 2019. Licensees are required to submit a renewal application, an annual financial statement, an audit of the

annual financial statement prepared by an independent certified public accountant for the previous year and fees

outlined in the AZDHS rules. There is no ultimate expiry after which no renewals are permitted. Additionally, in

respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted

in a timely manner along with the necessary supporting documents, and regulatory requirements are met, the licensee

would expect to receive the applicable renewed license in the ordinary course of business.

Regulations

In the state of Arizona, only cannabis that is grown and manufactured in the state can be sold in the state. Although

Arizona is not a vertically-integrated system, a single license holder is provided with the ability to cultivate, harvest,

process, transport, sell and dispense cannabis products. Delivery is allowed from dispensaries to patients, however the

delivery must be approved by the AZDHS.

Reporting Requirements

The AZDHS has not selected a state mandated seed-to-sale system at this time. Licensed entities are permitted to

choose their own provider or to track marijuana products from seed-to-sale using proprietary methods. Although there

are no periodic reporting requirements to the State, full seed-to-sale tracking is required by all licensees and is

periodically audited by the AZDHS. The Company uses MedMen 2.0 point of sale tracking software at the dispensary

level, and NAV at the cultivation, manufacturing and distribution level.

New York

New York Regulatory Landscape

In July 2014, the New York Legislature and Governor enacted the Compassionate Care Act (A06357E, S07923) (the

“CCA”) to provide a comprehensive, safe and effective medical marijuana program to meet the needs of New Yorkers.

The program currently allows 10 Registered Organizations (each, an “RO”) to hold vertically-integrated licenses and

service qualified patients and caregivers. Limited product types are allowed in the state. The New York State

Department of Health (the “NYSDOH”) is the regulatory agency overseeing the medical marijuana program.

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Licenses

State licenses in New York are renewed every two years. Before the two-year period ends, licensees are required to

submit a renewal application per guidelines published by the NYSDOH. While renewals are granted every two years,

there is no ultimate expiry after which no renewals are permitted. Additionally, in respect of the renewal process,

provided that the requisite renewal fees are paid, the renewal application is submitted in a timely manner, and there

are no material violations noted against the applicable license, the licensee would expect to receive the applicable

renewed license in the ordinary course of business.

Regulations

In the state of New York, only cannabis that is grown and manufactured in the state can be sold in the state. New York

is a vertically-integrated system however it does allow ROs to wholesale manufactured product to one another.

Delivery is allowed from dispensaries to patients, however the delivery plan must be pre-approved by the NYSDOH.

Reporting Requirements

The state of New York has selected BioTrackTHC’s solution as the state’s T&T system used to track commercial

cannabis activity and seed-to-sale. The BioTrackTHC system is required to serve as all ROs’ patient verification

system, but is optional as the RO facing tracking system. In addition to entering all dispensing transactions into the

BioTrackTHC system, every month the NYSDOH requests a dispensing report in Excel format, via email, showing

all products dispensed for the month. This is the only report a licensee is required to submit to the NYSDOH. All other

data is pulled by the NYSDOH directly from the licensee’s seed-to-sale tracking system.

Illinois

Illinois Regulatory Landscape

In 2013, the Illinois General Assembly passed the Compassionate Use of Medical Cannabis Pilot Program Act (410

ILCS 130), Public Act 98-0122 (the “Illinois Act”), which was signed into law by the Governor on August 1, 2013

and went into effect on January 1, 2014. The Illinois Act allows an individual who is diagnosed with a debilitating

condition to register with the state to obtain cannabis for medical use. The program currently allows 60 Dispensing

Organizations (each, a “DO”) and 22 cultivation centers state wide; all separately registered in a non-vertically-

integrated model. A large variety of medical cannabis products are allowed in the state, including the smoking of

cannabis flower. Overall, the program is administered by the Illinois Department of Public Health (the “IDPH”), the

Illinois Department of Financial and Professional Regulations (the “IDFPR”) is the regulatory agency overseeing the

medical marijuana program for DOs and the Illinois Department of Agriculture (the “IDOA”) is the regulatory agency

overseeing the medical marijuana program for cultivation centers.

In June 2019, Illinois governor signed legislation legalizing marijuana for recreational use. The Cannabis Regulation

and Tax Act, legalizing and regulating marijuana for recreational use, went into effect on June 25, 2019, however

recreational sales of marijuana began in the state on January 1, 2020. The adult use program allowed existing medical

marijuana license holders to apply for Early Approval Adult Use Dispensing Organization (“EAAUDO”) licenses to

be able to sell adult use product at existing medical marijuana dispensaries (known as “co-located” or “same site”

dispensaries) on January 1, 2020, and to have the privilege of opening a secondary adult use only retail site for every

medical marijuana dispensary location the DO already had in its portfolio. All EAAUDO license holders were also

required to commit to the state’s groundbreaking Social Equity program either through a financial contribution, grant

agreement, donation, incubation program, or sponsorship program.

IDFPR will also be issuing an additional 75 Adult Use Dispensing Organization (“AUDO”) licenses before May 1,

2020. The application period for these competitive licenses was October 2019-January 2020. IDFPR will also issue

an additional 110 AUDO licenses by December 21, 2021. No single person or entity can have direct or indirect

financial interest in more than 10 adult use dispensary licenses of any sort.

IDOA can modify or change the number of cultivation center licenses available on or after July 1, 2021, but the total

number cannot exceed 30 licenses. Much like the EAAUDO process, medical cannabis cultivation centers were

allowed to apply for Early Approval Adult Use Cultivation Center (“EAAUCC”) licenses 60 days after the Cannabis

Regulation and Tax Act went into effect.

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Additional license types created by the Cannabis Regulation and Tax Act were craft growers, infuser organizations

and transportation organizations.

Licenses

Medical, EAAUDO, EAAUCC licensees are required to submit an annual renewal application and fees per guidelines

published by the IDFPR and the Department of Agriculture respectively. While renewals are annual, there is no

ultimate expiry after which no renewals are permitted. Additionally, in respect of the renewal process, provided that

the requisite renewal fees are paid, the renewal application is submitted in a timely manner, and regulatory

requirements are met, the licensee would expect to receive the applicable renewed license in the ordinary course of

business.

Under the adult use program, AUDO licenses are eligible for renewal every other year.

Regulations

In the state of Illinois, only cannabis that is grown and manufactured in the state can be sold in the state. Illinois is not

a vertically-integrated system, as a result, DO license holders are provided the ability to dispense cannabis and

cultivation centers are provided with the ability to cultivate, harvest, process and transport cannabis products. Delivery

is not allowed from dispensaries to patients or consumers. Only designated caregivers may deliver medical cannabis

to qualified patients.

Reporting Requirements

The state of Illinois has selected BioTrackTHC’s solution as the state’s track and trace system used to track

commercial cannabis activity and seed-to-sale. Licensed entities are permitted to choose their own provider, with a

requirement that it has the ability integrate with BioTrackTHC via an API. License holders are required to provide

IDFPR an annual financial report.

Massachusetts

Massachusetts Regulatory Landscape

The use of cannabis for medical use was legalized in Massachusetts by a voter approval of the Massachusetts

Marijuana Initiative in 2012. The law took effect on January 1, 2013, eliminating criminal and civil penalties for the

possession and use of up to a 60-day or ten ounce supply of marijuana for medical use for patients possessing a state

issued registration card.

On November 8, 2016, Massachusetts voters approved Question 4 or the Massachusetts Marijuana Legalization

Initiative, which allowed for recreational or “adult use” cannabis in the Commonwealth. On September 12, 2017, the

Cannabis Control Commission (“CCC”) was established under Chapter 55 of the Acts of 2017 (the “Massachusetts

Act”) to implement and administer laws enabling access to medical and adult-use cannabis.

On November 16, 2018, the CCC issued the first notices for retail marijuana establishments to commence adult-use

operations in Massachusetts.

Under the current program there are no state-wide limits on the total number of licenses permitted however, no

individual or entity shall be a controlling person over more than three licenses in a particular class of license. Similarly,

no individual, corporation or other entity shall be in a position to control the decision making of more than three

licenses in a particular class of license. In addition, all Marijuana Establishments are required to enter into host

community agreements with the municipality in which they are located.

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Licenses

Provisional Marijuana Establishment licenses are valid for one year and licenses must be renewed annually thereafter

in accordance with CCC guidelines. There is no ultimate expiry after which no renewals are permitted. Additionally,

in respect of the renewal process, provided that the requisite renewal fees are paid, the renewal application is submitted

in a timely manner, the applicable licensee provides an accounting of the financial benefits accruing to the municipality

as the result of the host community agreement, and regulatory requirements are met, the licensee would expect to

receive the applicable renewed license in the ordinary course of business.

Regulations

In the state of Massachusetts, only cannabis that is grown and manufactured in the state can be sold in the state.

Massachusetts is not a vertically-integrated system, as a result a Marijuana Retailer may purchase and transport

marijuana products from Marijuana Establishments and transport, sell or otherwise transfer marijuana products to

Marijuana Establishments and to consumers. Licensed cultivators and product manufacturers may cultivate, harvest,

process, produce package and sell marijuana products to Marijuana Establishments.

Reporting Requirements

The state of Massachusetts has selected Franwell’s METRC solution as the state’s T&T system used to track

commercial cannabis activity and seed-to-sale. The system allows for other third-party system integration via API.

Virginia

Virginia Regulatory Landscape

Virginia legalized medical marijuana for the treatment of glaucoma and cancer as part of a sweeping overhaul of the

state’s drug laws in 1979. In 2015, state legislation provided an affirmative defense for the possession of cannabidiol

or THC-A oil pursuant to a valid written certification for patient use of the oils from a physician to alleviate intractable

epilepsy but made no provision for a patient to acquire these substances.

Legislation passed in 2016 and 2017 authorized five pharmaceutical processors, one in each Health Service Area, to

produce and dispense these oils, under a permit issued by the Board of Pharmacy (“BOP”). Legislation in 2018

expanded the use of these oils to any diagnosed condition or disease, upon recommendation from any physician, and

required that dispensing of these oils be reported to the Prescription Monitoring Program (“PMP”), and that physicians

request information from the PMP prior to issuing written certifications. As set forth in §54.1-3442.6 of the Code of

Virginia, the Board may issue or renew in any year a maximum of five pharmaceutical processor permits, one for each

health service area established by the Board of Health. Currently, the program only allows for two types of products,

cannabidiol oil and THC-A oil.

Permits

Permits are renewed annually in accordance with BOP guidelines. There is no ultimate expiry after which no renewals

are permitted. Additionally, in respect of the renewal process, provided that the requisite renewal fees are paid, the

renewal application is submitted in a timely manner, and regulatory requirements are met, the licensee would expect

to receive the applicable renewed license in the ordinary course of business.

Regulations

In the state of Virginia, a pharmaceutical processor shall dispense only cannabidiol oil and THC-A oil that has been

cultivated and produced on the premises of such pharmaceutical processor. Virginia is a vertically-integrated system,

as a result, permit holders are provided the ability to cultivate, harvest, process and dispense approved medical

cannabis products. Delivery is permitted.

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Reporting Requirements

Pharmaceutical processors are required to use an electronic radio-frequency identification (“RFID”) seed-to-sale

tracking system to enable the state to monitor their activity. The electronic tracking system must include, at a

minimum, a central inventory management system and standard and ad hoc reporting functions and must be capable

of otherwise satisfying required recordkeeping. At this time, the state has not selected a state-wide seed-to-sale

electronic tracking system.

Regulatory Affairs Program

The Company’s Executive Vice President (“EVP”) of Regulatory Affairs oversees, maintains, and implements the

compliance program and personnel in conjunction with the Senior VP of Legal. In addition to the Company’s robust

legal and regulatory affairs departments, the Company also has local regulatory/compliance counsel engaged in the

jurisdictions (state and local) in which it operates. Such counsel provides legal advice to the Company regarding

compliance with state and local laws and regulations and the Company’s legal and compliance exposures under United

States federal law. The EVP of Regulatory Affairs and Regulatory Affairs Managers serve as liaisons to state and

local regulators during both regular business hours and after hours. The Regulatory Affairs Department, in partnership

with the Retail, Human Resources, Legal, and Supply Chain Departments, is responsible for ensuring operations and

employees strictly comply with applicable laws, regulations and licensing conditions and ensure that operations do

not endanger the health, safety or welfare of the community. The EVP of Regulatory Affairs coordinates with the

Security Department to ensure that the operation and all employees are following and complying with the Company’s

written security procedures.

The Regulatory Affairs Department oversees training for all employees, including on the following topics:

Compliance with State and Local Laws

Safe Cannabis Use

Dispensing Procedures

Security & Safety Policies and Procedures

Inventory Control

Track-and-Trace Training Session

Transportation Procedures

The Company’s compliance program emphasizes security and inventory control to ensure strict monitoring of

cannabis and inventory from delivery by a licensed distributor to sale or disposal. Only authorized, properly trained

employees are allowed to access the Company’s computerized seed-to-sale system.

The Company has created comprehensive standard operating procedures, operating plans, trackers and checklists that

include detailed descriptions and instructions for receiving shipments of inventory, inventory tracking, recordkeeping

and record retention practices related to inventory, as well as procedures for performing inventory reconciliation and

ensuring the accuracy of inventory tracking and recordkeeping. The Company maintains accurate records of its

inventory at all licensed facilities. Adherence to the Company’s standard operating procedures is mandatory and

ensures that the Company’s operations are compliant with the rules set forth by the applicable state and local laws,

regulations, ordinances, licenses and other requirements.

In addition to the above disclosure, please see the “Risk and Uncertainties” section herein and “Risk Factors” in the

Company’s Annual Information Form for further risk factors associated with the operations of the Company.

Service Providers

As a result of any adverse change to the approach in enforcement of United States cannabis laws, adverse regulatory

or political change, additional scrutiny by regulatory authorities, adverse change in public perception in respect of the

consumption of marijuana or otherwise, third party service providers to the Company could suspend or withdraw their

services, which may have a material adverse effect on the Company’s business, revenues, operating results, financial

condition or prospects.

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In addition to the above disclosure, please see “Risk Factors — Risks Associated with the Business of the Company —

Service Providers” in the Company’s Annual Information Form.

Ability to Access Public and Private Capital

The Company has historically had access to equity and debt financing from the public and private markets in Canada

and private markets in the United States and internationally. While the Company is not able to obtain bank financing

in the U.S. or financing from other U.S. federally regulated entities, subject to market conditions, it has the ability to

access to such equity and debt financing in Canada, the United States and internationally, both on a brokered and non-

brokered basis. The Company’s executive team and the MedMen Board have extensive relationships with sources of

private capital (such as funds, high net worth individuals and family offices), which has facilitated its ability to

complete non-brokered financing transactions.

If such equity and/or debt financing was no longer available in the public markets in Canada due to changes in

applicable law or on terms which are acceptable, then the Company would endeavor to raise equity and/or debt

financing privately. Commercial banks have approached the cannabis industry cautiously to date. However, there are

increasing numbers of high net worth individuals, family offices, private equity and venture capital firms and other

funds that have made meaningful investments in cannabis companies, including those with U.S. operations. Although

there has been an increase in the amount of private financing available to cannabis companies over the last several

years, there can be no assurance that additional financing will be available to the Company when needed or on terms

which are acceptable.

The Company’s inability to raise financing to fund operating or capital expenditures or acquisitions could limit its

ability to operate or its growth and may have a material adverse effect upon the Company’s business, financial

condition, cash flows, results of operations or prospects.

In addition to the above disclosure, please see “Risk Factors — Risks Associated with the Business of the Company —

Going Concern Risk” in the Company’s Annual Information Form.